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(District Court, S. D. New York. February 1, 1919.) RAILBOADS 542, New, vol. 6A Key-No. Series—ACTIONS AGAINST-SUB


The provision of General Order of Director General of Railroads No. 50 of October 28, 1918, that pleadings in pending actions for injuries against a railroad company “may” be amended by substituting the Director General and dismissing the company as defendant, must be construed as permissive only, in view of Federal Control Act (Comp. St. 1918, 88 311534a311534p), providing that carriers, while under federal control, shall be subject to all laws and liabilities as common carriers, and that actions may be brought against them, “and judgments rendered as now provided by law," and such substitution of parties will not be made on motion of defendant.

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, May.) At Law. Action by Jens Martinius Jensen against the Lehigh Valley Railroad Company. On motion by the defendant to substitute the Director General of Railroads in place of the defendant, Lehigh Valley Railroad Company, as defendant, and to dismiss the action as against the Lehigh Valley Railroad Company. Denied.

On April 27, 1918, the plaintiff was injured while an employé of the Director General of Railroads upon the Lehigh Valley Railroad Company. On July 25, 1918, he brought an action at law against the Lehigh Valley Railroad Company for negligence under the federal Employers' Liability Act (Act April 22, 1908, c. 149, 35 Stat. 65 (Comp. St. 88 8657-8665]). Issue was joined and the case set for trial upon the day calendar. At 12 o'clock noon on De.cember 28, 1917, the President took possession and assumed control of the Lehigh Valley Railroad Company by virtue of authority vested in him by act of Congress approved August 29, 1916, and appointed William G. McAdoo Director General of such railroads. By the proclamation assuming possession of the railroads the President empowered the Director General to pass general and special orders which should have paramount authority subject to existing statutes. On March 21, 1918, Congress passed the "Federal Control Act" (Act March 21, 1918, c. 25 (Comp. St. 1918, &$ 3115342-311534p]), of which section 10 provided that “carriers while under federal control shall be subject to all laws and liabilities as common carriers, whether arising under state or federal laws or at common law, except in so far as may be inconsistent with the provisions of this act or of any other act applicable to such federal control or with any order of the President. Actions at law or suits in equity may be brought by and against such carriers and judgments rendered as now provided by law; and in any action at law or suit in equity against the carrier, no defense shall be made thereto upon the ground that the carrier is an instrumentality or agency of the federal government.

No process, mesne or final, shall be levied against any property under such federal control.” Section 8 of that act provided : "The President may execute any of the powers herein and heretofore granted him with relations to federal control through such agencies as he may determine."

The Director General, on October 28, 1918, by General Order No. 50, provided as follows: "Actions at law, suits in equity and proceedings in admiralty hereafter brought in any court based on

claim for death or injury to person or for loss or damage to property arising since December 31, 1917, and growing out of the possession, use, control or operation of any railroad or system of transportation by the Director General of Railroads which action, suit or proceeding but for Federal control might have been brought against the carrier company, shall be brought against William G. Em For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

McAdoo, Director General of Railroads, and not otherwise." The General Order further provided: "The pleadings in all actions at law, suits in equity, or proceedings in admiralty now pending against any carrier company for a cause of action arising since December 31, 1917, based upon the cause of action arising from or out of the operation of any railroad or other carrier may on application be amended by substituting the Director General of Railroads for the carrier company as party defendant and dismissing the company therefrom."

The question involved in the motion is whether, under the paragraph of General Order No. 50 last above recited, an action pending on October 28, 1918, for an injury occurring on April 27, 1918, should, upon the defendant's motion, under section 10 of the Federal Control Act, be changed from an ac tion against the railroad to an action against the Director General.

Alexander & Green, of New York City, for the motion.
Edward J. McCrossin, of New York City, opposed.

LEARNED HAND, District Judge (after stating the facts as above). The change in the language of the third paragraph from that of the first is significant. In the first the order directs that all actions “shall” be thereafter brought against the Director General. In the third that the existing pleadings “may” be changed. “May" does indeed at times mean “shall,” but hardly when the two words are in such immediate contrast. At least there is no presumption that way. Moreover, I think that, if the third section be construed as permissive only, it serves a sufficient purpose; it would give plaintiffs the right to substitute the Director General, which they might well wish to do, considering the prohibition of the statute against any process upon judgments against the carriers while the roads were in federal control. It is quite true that the third recital is to the effect that the liability should be of the Director General, and that was certainly the meaning of the first paragraph. I think that that paragraph was enough to satisfy the recital, without carrying the meaning into the apparently permissive language of the third.

if, on the other hand, I were to construe the third paragraph as retroactive, at least a formal difficulty would arise, in that it would annul a liability once attached, and substitute another. Now, it is true that that substituted liability, though without express sanctions, has by implication the pledge of the public faith, when reduced to judgment against the Director General. Such a judgment would be probably as good a remedy as a judgment against the United States in the Court of Claims, which was held sufficient in cases of condemnation in Crozier v. Krupp, 224 U. S. 290, 32 Sup. Ct. 488, 56 L. Ed. 771. It is therefore not necessary to say that an explicitly retroactive order would be invalid, if the Director General had made one. I concede, moreover, that there is no presumption against retroactive interpretation, if the change be only in procedure. Yet even if this be possibly only a change in remedy, it is an important change, and not under our traditional notions in such matters to be lightly assumed. I think there ought to be a more definite indication of such a purpose than the words contain.

It is, of course, true that normally we should expect the liabilities to be those of the Director General, who is in control; but Congress

has prescribed otherwise, and the general situation is not one in which the judgments need inevitably fall upon the carriers. A final settlement must be made, in which such claims may well be taken to the account of the Director General, whoever be the judgment debtor. Congress, which had to prescribe a modus vivendi, subject to changes on which the Director General might from time to time determine, appears to have found it easier to leave matters as they were till such time as he chose to act. It does not follow that he is to be assumed to mean to upset that status retroactively, when the just result can be later reached in the settlement. Indeed, it does not even follow that Congress meant to give him the power to do so if he should mean to. Since justice to the carriers may be accomplished without departing from our accustomed habits in relation to provisions of the kind, it seems to me better to follow them.

The only decisions upon the order which I know are two. Keefe v. Chicago, etc., Ry. Co., decided December 2, 1918, in the state district court of Minnesota, goes further than I need go here. Rutherford v. Union Pac. R. Co., 254 Fed. 880, decided in January, 1919, by Judge Munger in the United States District Court for the District of Nebraska, is contrary. It must be conceded that the judicial opinion upon the validity and meaning of the order has not yet become definitely settled. It appears to me that Congress pretty clearly meant, by the term "carriers,” the corporations themselves, and that the right to sue them must remain certainly till it is changed by some valid provision.

The motion is denied.


(District Court, D. Colorado. December 21, 1918.)

No. 6766.


A mutual insurance society, organized under the laws of Illinois, which had no paid employés to go about the country soliciting members, and which only accepted members on receiving their application with the first installment of dues at Chicago, held not "doing business" in the state of Colorado, so that attempted service of summons by leaving a copy with the state insurance commissioner did not give the Colorado court jurisdiction over the society.

[Ed. Note.-For other definitions, see Words and Phrases, First and

Second Series, Doing Business.] 2. INSURANCE 814 PROCESS-AUTHORITY OF AGENT.

A member of a mutual insurance society, having its principal office in the state of Illinois, who solicited residents of Colorado to apply for membership, but received no compensation therefor, etc., held not an authorized agent of the association, and so the association could not be served in Colorado by leaving copies of the summons with such member. At Law. Action by Rachael L. Shwayder against the Illinois Commercial Men's Association, a corporation, begun in the state court and For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

removed to the federal court. On motion to quash service of summons. Motion granted.

David E. Rayor and C. Clyde Barker, both of Denver, Colo., for plaintiff.

Hindry, Friedman & Brewster, of Denver, Colo., for defendant.

LEWIS, District Judge. This case is here on removal from the State Court, and the defendant has entered a special appearance in order to move that the service of process issued by the State Court be quashed. There are affidavits supporting and opposing the grounds of the motion, they being that the defendant was not doing business in the State of Colorado, and that the parties on whom service was had did not represent it. There is no basis for dispute as to the real facts. The affidavits disclose that the defendant is a mutual insurance society organized under the laws of Illinois. It extends the privilege of becoming members of the society to a restricted class, viz. traveling men. It has no paid employés to go about the country soliciting members or transacting any business for it. It depends solely upon the good will and enthusiasm of those who are already members. It periodically sends to members circular letters, calling their attention to the advantages of membership, and requesting that they commend the society to other traveling men with a view to having them make application for membership. The universal procedure in acquiring membership is this: The applicant makes out his application in his own handwriting and mails it, with the first installment of dues, to the defendant at Chicago. The Board of Directors sit at Chicago to pass upon all applications. If an application be approved a certificate of membership is then issued to the applicant and mailed to him at his post office address indicated in his application. In the event of the death of a member proof of that fact is made out and sent to the defendant at Chicago. There is no agent or officer in Colorado who can receive such proof or pass upon its sufficiency, or who is authorized in any respect to deal with the beneficiary in adjusting the claim. The service was attempted in a twofold manner; that is, by leaving copies of the summons with the State Insurance Commissioner, and also with James R. Mitchel.

[1, 2] Under the state statute the service had by leaving copies with the State Insurance Commissioner would have been good if the defendant was doing business in this state, and the service had on James R. Mitchel would have been good if the defendant was doing business in this state and Mitchel was, at the time, its agent or representative to the extent required for that purpose. Mitchel was a member of the society, and the sole basis for the plaintiff's claim that the service on him was good, as is shown, is that it appears that he, on various occasions, solicited parties to send in their applications for membership; that he was requested to do so by circular letters received by him from the defendant, and that in this way he had authority to solicit members; that he was provided with blank forms of application, and those forms required that the applicant must be recommended by a member; that he, in September, 1917, solicited one

Kobey, and that he forwarded Kobey's application when made out, and enclosed his personal check therewith for $2.10, in payment of Kobey's dues, and that said application was accepted and Kobey received as a member. On these facts I find that neither of the elements requisite to the validity of the service exists. They do not sustain but repel any conclusion that the defendant was "doing business within the state in such manner and to such extent as to warrant the inference that it is present there. And even if it is doing business within the state the process will be valid only if served upon some authorized agent." Railway Co. v. McKibbin, 243 U. S. 265, 37 Sup. Ct. 280, 61 L. Ed. 710. Other cases in addition to those cited by counsel for the defendant, establishing the lack of jurisdiction over the person of the defendant, are Tobacco Co. v. Tobacco Co., 246 U. S. 79, 38 Sup. Ct. 233, 62 L. Ed. 587, Ann. Cas. 1918C, 537; Simon v. Railway Co., 236 U. S. 115, 35 Sup. Ct. 255, 59 L. Ed. 492; and Toledo Co. v. Hill, 244 U. S. 49, 37 Sup. Ct. 591, 61 L. Ed. 982.

The motion to quash the service of summons on both Mitchel and Fairchild, the State Insurance Commissioner, is sustained.




An English seaman who signed in England for the round voyage apparently in good health, but afterward became ill with tuberculosis, who did not leave the vessel at an American port, but was taken off by immigration officers, was not an "alien brought to this country," within the meaning of Immigration Act Feb. 20, 1907, § 9 (Comp. St. 1916, § 4254), and the vessel is not subject to a fine thereunder.

At Law. Action by the W. & C. T. Jones Steamship Corporation against Norman R. Hamilton, Collector of Customs. Judgment for plaintiff.

Kirlin, Woolsey & Hickox, of New York City, and Edward R. Baird, Jr., of Norfolk, Va., for plaintiff.

Richard H. Mann, U. S. Atty., of Petersburg, Va., and Hiram M. Smith, Asst. U. S. Atty., of Richmond, Va., for defendant,

WADDILL, District Judge. This is an action at law brought by the W. & C. T. Jones Steamship Company against Norman R. Hamilton, collector of customs for the ports of Norfolk, Portsmouth, and Newport News, individually, to recover a fine of $100 imposed upon the British steamship Ilwen for an alleged violation of section 9 of the act of Congress known as the Immigration Act, approved February 20, 1907 (34 Stat. 901, c. 1134 [Comp. St. 1916, § 4254]). The vessel put into Newport News for bunker coal. There then was upon her a seaman who had signed as a member of her crew at Newcastle, England, for a round trip. At the time of signing he appeared to be healthy, For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

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