22 F.(2d) 791 HUDSON et al. v. MARYLAND CASUALTY CO. Circuit Court of Appeals, Eighth Circuit. November 8, 1927. No. 7657. 1. Courts 366(1)-Decision construing state statute must be by highest court of state, to be binding on federal courts. Federal courts will follow the state courts of last resort in construction of a state statute, but such construction must be by the highest court of the state, to be within the rule. 2. Courts 366(1)-Decisions of Missouri appellate courts, construing state statute, held not binding on federal court. The highest court in Missouri is the Su preme Court, and, though there are regional appellate courts, whose decisions are final and not of right reviewable by the Supreme Court, their decisions construing a state statute are not authoritative, and not binding on the federal courts. 3. Mechanics' liens 214-Creditor held not to lose right to lien by reducing his claim to Judgment. Under the mechanic's lien law of Missouri, a creditor entitled to a lien does not lose the right by reducing his claim to judgment. Appeal from the District Court of the United States for the Western District of Missouri; Albert L. Reeves, Judge. Fred S. Hudson, trustee in bankruptcy, and others, appeal from an order sustaining a mechanic's lien in favor of the Maryland Casualty Company. Affirmed. Henry A. Bundschu, of Kansas City, Mo. (Leon M. Bailey and Wilson, Bundschu & Bailey, all of Kansas City, Mo., on the brief), for appellants. Clyde Taylor, of Kansas City, Mo. (Spencer Harris, of Kansas City, Mo., on the brief), for appellee. Before STONE and VAN VALKENBURGH, Circuit Judges, and OTIS, District Judge. STONE, Circuit Judge. This is an appeal from an order in a bankruptcy proceeding allowing a claim for over $28,000 and sustaining a mechanic's lien therefor on certain property of the bankrupts. There is but one point of dispute and that is as to the allowance of the mechanic's lien. As to that matter, the situation is as follows: The Kaw Boiler Works Company furnished certain construction material to the bankrupts which was used in Missouri. It there after brought suit on this account in the Kan sas state court, suing out an attachment and a garnishment in aid thereof. To secure release of the attachment and garnishment, the bankrupts gave a bond with the Maryland Casualty Company as surety. That case proceeded to judgment in favor of the plaintiff, whereupon the surety company paid the amount of the judgment and took an assignment thereof. During the pendency of the above suit, the Kaw Boiler Works Company filed its account and claim of mechanic's lien in Missouri in accordance with the laws of that state. After the above matters had transpired, the bankruptcy proceedings occurred. In the bankruptcy proceedings, the Kaw Boiler Works Company and the Maryland Casualty Company were ordered to appear and set up any claims either might have against the bankrupts. They did this by intervention setting out the facts and asking allowance of the claim in full with interest and of the mechanic's lien in support thereof. The contention of the trustee (appellant) is that, under the Missouri law, mechanic's lien is based upon the account; that a judgment upon the account merges it; that after an account has been so merged into a judgment, it cannot be the basis of a mechanic's lien. that the Missouri courts of last resort have The argument in favor of this contention is determined that an account merged into a judgment can no longer be the basis of a mechanic's lien, under the laws of that state; that the mechanic's lien law depends upon the state statute of Missouri; that the federal courts are bound by the construction of state statutes by the courts of last resort of the state; that, irrespective of whether the federal courts are bound by these Missouri decisions, they should be followed to prevent conflict and in harmony and because they are right in principle. [1, 2] That the federal courts will follow the state courts of last resort in construction of a state statute is true. It is also true that this rule is emphasized where such statute deals with or affects property rights. This principle is well illustrated in adjudicated cases dealing with mechanic's lien statutes of the states (Haskell v. McClintic-Marshall Co., 289 F. 405, 410, Ninth Circuit; Morgan v. First National Bank, 145 F. 466, 472, Fourth Circuit; In re Grissler, 136 F. 754, 756, Second Circuit). Therefore, the present contention reduces itself to what the courts of last resort of Missouri have determined or, if there is no such determination, what rule should be announced by this court. Appellant cites several decisions of the state Courts of Appeals which seem to announce the doctrine as contended for by him, but appellee cites a later opinion (Matthews v. Stephenson, 172 Mo. App. 220, 157 S. W. 887), which seems to hold to the contrary. Therefore, even though the Courts of Appeals in Missouri be regarded as courts of final resort in the sense that their decisions are to be followed by the federal courts, the rule contended for by appellant seems overthrown or, at the least, doubtful. If it is doubtful, we must determine the matter independently. It is true that for some purposes and in some senses these Courts of Appeals are courts of final resort. There is no positive right to a review of their decisions by the Supreme Court of the state. In that sense their decisions are final and in that sense the Supreme Court of the state has referred to them as courts of "last resort" (State ex rel. Winters v. Trimble [Mo. Sup.] 290 S. W. 115, 117; State ex rel. Koenen v. Daues [Mo. Sup.] 288 S. W. 14, 15; State ex rel. American Car & Foundry Co. v. Daues, 313 Mo. 681, 282 S. W. 389, 391). But the rule now invoked is one of federal procedure and its meaning must be sought in its purpose. That purpose is for federal courts to apply the state statute as that statute has been authoritatively declared by the highest court of the state. Until the court of last resort, as personified by the highest state court which can speak upon the subject, has spoken, there can be no such finality of decision as required by the rule. The highest court of Missouri is the Supreme Court. Its decisions are controlling upon the three Courts of Appeals of that state (Const. Mo. art. 6 [Amendment of 1884], § 6) and decisions of such Courts of Appeals have not the force of stare decisis with the Supreme Court (Sedalia v. Donohue, 190 Mo. 407, 415, 89 S. W. 386, 4 Ann. Cas. 89; Paddock v. Railway, 155 Mo. 524, 534, 56 S. W. 453), nor even as establishing the "law of the case" (Paddock v. Railway, 155 Mo. 524, 534, 56 S. W. 453; Hennessy v. Brewing Co., 145 Mo. 104, 115, 46 S. W. 966, 41 L. R. A. 385, 68 Am. St. Rep. 554). That the Supreme Court of the state has jurisdiction to construe the mechanic's lien statute of that state is unchallenged. Such matters would go to that court were the necessary amount involved. In this instant case, such review would have been by the Supreme Court had the trial been in a state court. Each of these Courts of Appeals has a separate geographical jurisdiction and a decision by one such court is binding only within its jurisdiction. Where these courts disagree, there is a divergence of authority even within the state and such differences have occurred. No one nor all of them can finally announce the law of the state, only the Supreme Court of the state can do that. This court has great respect for the opinions of the learned judges of these Courts of Appeals and will always give careful attention to the reasoning in their opinions but persuasive force of reasoning and binding authority of decision are different matters based upon different considerations. The harmony of decision desirable and sought by the federal rule of construction is harmony with the law as declared for the entire state by the highest state court which could determine the matter. In our judgment, the Courts of Appeals of the state of Missouri are not such courts. [3] We conclude that the question is open as there is no direct decision of the state Supreme Court upon the matter here involved. We have carefully examined and considered all of the Missouri cases (in the Courts of Appeals) and many cases, from other states, dealing with similar questions respecting mechanic's lien statutes. Such statutes are beneficent and intended to secure the payment for labor or materials put into various kinds of structures. The general principles running through such statutes and the resulting decisions is that payment of such character of indebtedness is desirable; that such security as may be afforded by a lien can be assured to the creditor through the formal steps prescribed in the particular statute. The main purpose of such statutes is to secure payment of the indebtedness. We can see no reason for giving this valuable right to an unliquidated, disputed claim and denying it to one established by a judgment. In either instance, the formal steps required by the statute would have to be taken but that the right to take such steps and secure the benefit of the lien should be denied a diligent creditor who establishes the verity of his claim and should be accorded a creditor who is negligent in establishing his claim or whose claim may be largely unfounded, does not accord with our sense of justice. However, if the Missouri statute had clearly announced such purpose we would feel constrained to apply the law as we found it. We find no such requirement in these statutes. What we do find therein is the expressed purpose to protect any such character of indebtedness (liquidated or unliquidated) when the creditor complies with the formal requirements set out therein. We think the order should be and, therefore, it is affirmed. 22 F.(2d) 793 ELLERD v. GRIFFITH et al. Circuit Court of Appeals, Fifth Circuit. November 28, 1927. Rehearing Denied December 22, 1927. No. 5147. Conspiracy 6-Attorney may recover from persons whose concerted action deprived him of one-third interest in judgment previously fixed as his fee. Where attorney had contract fixing fee at one-third of amount recovered, he was beneficial owner of one-third interest in judgment, was damaged by concerted action of others to deprive him of it, and could recover from any who participated in such action. In Error to the District Court of the United States for the Western District of Texas; Charles A. Boynton, Judge. Action by Reuben M. Ellerd against Hattie C. Griffith and others. Judgment for defendants, and plaintiff brings error. Reversed and remanded, with directions. lands levied on, and after the debt mentioned was paid refused to convey any of the land to plaintiff, sold and conveyed it to persons who were innocent purchasers for value without notice of plaintiff's rights, and co-operated with Mrs. Griffith in preventing the payment to plaintiff of any part of the sum owing to him as a fee. At the conclusion of the evidence the court, pursuant to a request of the defendants, instructed the jury to return a verdict in their favor. Under the above-mentioned phase of the evidence the plaintiff was the beneficial owner of a one-third interest in the judgment rendered in favor of Mrs. Griffith, was entitled to one-third of what was realized from the enforcement of that judgment after the payment of the debt charged against it, and was damaged as the result of concerted action of two or more of the defendants having the effect of depriving him of what he was entitled to get. Any one of the defendants who participated in the commission of that wrong was liable to the plaintiff for damages resulting to him therefrom. Globe & Rutgers Fire Ins. Co. v. Firemen's Fund Ins. Co., 97 Miss. 148, 52 So. 454, 29 L. R. A. (N. S.) 869; Schultz v. Frankfort, etc., Co., 151 Wis. 537, 139 N. W. 386, 43 L. R. A. (N. S.) 520; 5 R. C. L. 1103. It follows that the above-mentioned ruling was erroneous. Before WALKER, BRYAN, and FOS- Because of that error, the judgment is reTER, Circuit Judges. Reuben M. Ellerd, of El Paso, Tex. (W. T. Brothers, of El Paso, Tex., on the brief), for plaintiff in error. John F. Weeks, of El Paso, Tex. (C. W. Tate, of Odessa, Tex., and Dan W. Burkhalter, of Dallas, Tex., on the brief), for defendants in error. WALKER, Circuit Judge. This was an action by the plaintiff in error (herein called the plaintiff), against the defendants in error, Hattie C. Griffith, a married woman, E. C. Couch, and others (herein called defendants), seeking to hold the defendants liable as conspirators to defeat the collection of a fee owing to plaintiff by Mrs. Griffith for services rendered by plaintiff as an attorney, which resulted in the recovery of a money judgment in favor of Mrs. Griffith, on a demand which was part of her separate estate. In the trial evidence tending to prove the following was adduced: After plaintiff as attorney for Mrs. Griffith, under a contract fixing his fee at one-third of the amount recovered, had obtained a judgment in her favor she assigned that judgment to E. C. Couch by an instrument which empowered Couch to bid in lands levied on under that judgment, and, after payment of a described debt, to convey two-thirds of said lands to Mrs. Griffith or order, and one-third thereof to plaintiff or order, the transfer to plaintiff to be made on his written application. Couch accepted that transfer, bought in the versed, and the cause is remanded, with di- list of shipments held not to preclude recovery; the false swearing not having been willful. In Error to the District Court of the United States for the Northern District of Georgia; Samuel H. Sibley, Judge. Action by Samuel Jass and another against the American Insurance Company. Judgment for plaintiffs, and defendant brings error. Affirmed. Daniel MacDougald and Haines H. Haorgrett, both of Atlanta, Ga. (Spalding, MacDougald & Sibley, of Atlanta, Ga., on the brief), for plaintiff in error. Reuben R. Arnold, Lowry Arnold, and B. P. Gambrell, all of Atlanta, Ga., for defend [1] Briefly stated, so far as applies to this case, the "iron safe clause" requires the insured to take a complete itemized inventory of stock on hand at least once in each calendar year, and, unless one had been taken within 12 calendar months prior to the date of the policy, to take one within 30 days of the issuance of the policy; and the insured is required to keep a set of books which will clearly and plainly present a complete record of business transacted from the date of the inventory. Failure to comply with this clause voids the policy. It is contended that there was a breach of the iron safe clause because the inventory and books do not comply with the warranty of themselves and therefore their sufficiency was a question for the court and should not have Before WALKER, BRYAN, and FOS- been submitted to the jury. It appears that TER, Circuit Judges. ants in error. FOSTER, Circuit Judge. Defendants in error, a partnership composed of Samuel Jass and Moses Jass, doing business under the firm name of Jass Manufacturing Company, hereafter referred to as the insured, were in the business of buying and selling cotton waste and low grade cotton from cotton mills, gins, and oil mills, with a warehouse in Atlanta, Ga. Practically all of their transactions were in carload lots, and there were not over 50 of these a year. They employed no bookkeeper, and one of the partners kept the books. On May 6, 1925, a fire destroyed the Atlanta warehouse for a total loss. Plaintiffs in error, hereafter called the insurer, had issued seven policies of insurance on the said stock of cotton aggregating $13,333.33. The insurer declined to pay, setting up a breach of the standard "iron safe clause" which the policies contained, and also that, after the loss, one of the partners, Samuel Jass, had made a false affidavit as to shipments from Atlanta to Philadelphia, in which five carloads of merchandise were omitted from the list of shipments. This would also void the policies. the insured had made three inventories, one on January 1, 1924, one on June 26, 1924, and one on December 22, 1924. The policies were issued between May 26, 1924, and April 20, 1925, so that the inventories were sufficient to conform to the warranty in point of time. As might he expected where a regular bookkeeper was not employed, the inventories and the books were somewhat crude and ambiguous. Samuel Jass testified as to the methods of doing business and keeping the books, and also that the books had been turned over to Pennington, an expert accountant recommended by the insurer, to make a statement. Pennington testified in substance that the books checked accurately with the railroad records and evidence from other sources, and were sufficient to enable him to determine accurately the amount of goods on hand at the time of the fire. The record does not show any objection to the testimony of these witnesses. [2] Regarding the affidavit of Samuel Jass, while it was in fact inaccurate, there was other evidence tending to show that he was simply mistaken and did not willfully swear falsely. Under the circumstances above disclosed it was not error to submit the case to the jury under proper instructions. At the close of the evidence the insurer moved for a directed verdict on the above- Error is also assigned to the refusal to stated grounds, which was overruled, and the give certain special instructions requested. case went to the jury, with the result that a It is unnecessary to set these out in detail. verdict for $13,333.33 principal, and $700 in- It is sufficient to say that in the general terest, was returned. A motion for a new charge the court correctly and fully instructtrial was refused, but a remittitur was required the jury on the law applicable to the case, ed, reducing the judgment finally entered to and was not required to give the requested in$12,261.33 principal, and $647, interest. Er- structions additionally. ror is assigned to the refusal to direct a verdict. We find no reversible error in the record. Affirmed. 22 F.(2d) 795 FORT WORTH BELT RY. CO. v. UNITED STATES. Circuit Court of Appeals, Fifth Circuit. No. 5115. Commerce 27 (2)—Belt railroad, switching cars between industries and railroads, held subject to penalty for moving car with defective coupler in intrastate movement; "railroad engaged in interstate commerce" (Safety Appliance Act 1893, § 2 [45 USCA § 2]; Safety Appliance Act 1903, § 1 [45 USCA § 8]). Belt railroad, owning about 18 miles of railroad in city, business of which was confined to switching, classifying, and assembling cars in its yards, and switching cars between industries in city and transfer tracks of railroads engaged in intrastate and interstate commerce, is a "railroad engaged in interstate commerce," within Safety Appliance Act 1893, § 2 (45 USCA § 2; Comp. St. § 8606), and Safety Appliance Act 1903, § 1 (45 USCA § 8; Comp. St. § 8613), subject to the statutory penalty for moving a car having a coupler so defective that it could not be coupled or uncoupled without going between it and next car, notwithstanding, at time of movement involved, that car and others in connection with, which it was moved were exclusively engaged in intrastate com In Error to the District Court of the United States for the Northern District of Texas; James Clifton Wilson, Judge. Action by the United States against the Fort Worth Belt Railway Company. Judgment for the United States, and defendant brings error. Affirmed. Mark McMahon, of Fort Worth, Tex. (Cantey, Hanger & McMahon, Mark McMahon, and E. A. McCord, all of Fort Worth, Tex., on the brief), for plaintiff in error. Norman A. Dodge, U. S. Atty., of Fort Worth, Tex., and M. C. List, Sp. Asst. U. S. Atty., of Washington, D. C. switching the same from and to industries in Fort Worth to and from transfer tracks owned by railroad companies engaged in carrying both intrastate and interstate freight to and from such transfer tracks. Cars so switched or moved by defendant include such as contain both interstate and intrastate shipments. The defendant moved over its lines, from where it was placed on a transfer track by a railroad company, a car the coupling apparatus of which was so out of repair and inoperative that the car could not be coupled or uncoupled without the necessity of a man or men going between the ends of that car and the one to which it was coupled. When that movement was made, neither that car nor any car with which it was then connected or moved contained any interstate shipment, either incoming or outgoing. Because of the above-mentioned movement of the car having the defective coupling apparatus, the defendant was adjudged liable for the penalty prescribed by the Safety Appliance Act, as amended by the Act of March 2, 1903, 27 Stat. 531, § 2, 32 Stat. 943, § 1, Comp. Stat. §§ 8606, 8613 (45 USCA §§ 2, 8). By section 1 of the Act of March 2, 1903, the provisions of the Safety Appliance Act were so extended as to apply to "all cars used on any railroad engaged in interstate commerce." As the defendant uses its tracks to haul over them interstate shipments to and from their destination, it cannot plausibly be questioned that the defendant's lines constitute a "railroad engaged in interstate commerce." In behalf of the defendant it was contended that the prescribed penalty was not incurred by the movement in question, because no interstate traffic was involved in that movement. This contention is not sustainable, as it has been settled by authoritative decisions that the penalty is incurred by moving on a railroad engaged in interstate commerce a car defectively equipped as the one in question, though Before WALKER, BRYAN, and FOS- at the time of such movement that car and TER, Circuit Judges. WALKER, Circuit Judge. The plaintiff in error (herein called the defendant) owns and operates approximately 18 miles of railroad track in the city of Fort Worth. Its business is confined to switching, classifying, and assembling cars within its yards, and others in connection with which it is moved are engaged exclusively in intrastate comSouthern Ry. Co. v. United States, merce. 222 U. S. 20, 32 S. Ct. 2, 56 L. Ed. 72; Southern Ry. Co. v. Railroad Commission of Indiana, 236 U. S. 439, 35 S. Ct. 304, 59 L. Ed. 661. The judgment is affirmed. |