The material facts on which Barker rests his claim to an equitable lien are not in dispute. Prior to February 1, 1921, J. M. Barker and Joe S. Kite were copartners doing business under the name of Kite-Barker Motor Company, in Bristol, Va. On that date Barker sold his interest to Kite for $29,893.56 and the assumption by Kite of all listed and known debts of the firm. The terms of sale were expressed in a formal written agreement. As required by the agreement, Kite paid $9,300 in cash or its equivalent, and for the remainder gave six notes for $3,000 each and one note for $2,593.56, payable in sequence semiannually on February 1st and August 1st of each year. The agreement provided:

"In order to secure the due and punctual payment of the notes of the party of the second part at maturity the parties hereto have agreed that the said party of the second part shall, upon the execution of this agreement, deposit with the trustee, hereinafter constituted, as collateral security, solvent notes, approved by the trustee, which are secured by valid chattel mortgages or retention of title of automobiles sold, and for the payment of which the said collateral notes were executed, and therewith the chattel mortgages or retention of title agreements securing the payment of said notes, in at least the total aggregate sum of $21,000, which said collateral notes shall be held by the said trustee hereinafter constituted, as collateral security, securing the due and punctual payment.

"The said trustee is hereby authorized, as and when the said collateral notes deposited with him mature, provided no installments of interest or principal sum of any of the notes of the party of the second part to the party of the first part are due, to accept, and allow the substitution, by the party of the second part, of other similar notes as collateral security for the payment of the said notes of the party of the second part, and thereupon to permit the withdrawal by the party of the second part, of any of the notes theretofore deposited as collateral security: Provided, that the collateral notes

"The object of this provision is to per mit the collection, in the due course of business, by the party of the second part, of the collateral notes maturing under the life of this agreement, and, to affect as slightly as possible the continuation of the party of the second part's business without impairing the security of the party of the first part."

R. W. Kelly was designated as trustee under the contract. The trustee was not authorized to receive payment of the notes, but the duty was imposed on him, in case of default in payment of principal or interest, to declare all the notes due, and, on the request of Barker, to sell all the collateral notes then held by him and credit the net proceeds of sale on the notes of Kite. Kite deposited with the trustee, in accordance with the agreement collateral notes amounting to $21,000, taken for the purchase money of automobiles.

In February, 1922, Kite had the business incorporated as the Joe S. Kite Company, Incorporated, and Barker and the trustee thereafter dealt with the corporation as they had before dealt with Kite individually. On February 1, 1923, after the filing of the petition in bankruptcy, Barker requested the trustee to sell the notes held by him as collateral and apply the proceeds of sale to the balance of $15,032.66, then due on Kite's notes. The notes were sold by the trustee to Barker for $3,400, and the purchase money was credited on the notes of the Kite Company, leaving a balance of $11,632.66 due thereon to Barker. The face value of the notes sold was $30,000, but it turned out that Kite had collected thereon about $20,000. This $20,000 was used by the Kite Company in the general conduct of its business, which amounted to about $300,000 a year.

[1] Barker alleges in his petition, and Weingardner, office manager of the Kite Company, testified, that the collections were not kept separate, but were used for the general purposes of business including payments on real estate and payments on notes in banks. It thus appears that, even if Kite and the Kite Company had no right to receive payments on the collateral notes held by the trustee for Barker, the evidence af

fords no basis for an equitable lien on the assets in the hands of the trustee in bankruptcy. There is no evidence that any of the money was used for the purchase of the property now in the hands of the trustee in bankruptcy, or any article of it. Moreover, the written agreement of sale, providing security for the credit portion of the purchase money, negatives any intention that Barker should have a lien on the general assets by providing for the security of collateral notes to be lodged with the designated trustee. The written agreement does not provide that either Barker or Kelly, trustee, should receive payments on the collateral notes. On the contrary, it made provision for Kite to collect the collateral notes in the course of his business; Barker relying on Kite's promise to give to the trustee other notes in the place of those collected. The failure of Kite to comply with his promise to give the substituted notes furnishes no more basis for the claim of a lien on the general assets of the bankrupt than would his breach of promise to pay money from the proceeds of sales made in the course of the bankrupt's business. The record furnishes no evidence that the Kite Company had at the time of the bankruptcy any notes which could have been substituted for those collected by it.

There was no

written or parol agreement, either express or implied, for such a lien, and even if a parol agreement could be implied, it would be void under section 5194 of the Code of Virginia. Norfolk & P. T. Co. v. White, 113 Va. 102, 73 S. E. 467, Ann. Cas. 1913E, 655.

[2] The failure of Kite and the Kite Company to substitute other collateral for the notes they had collected under authority from Barker was a mere breach of promise, which conferred no lien on the general assets in the hands of the trustee in bankruptcy standing in the shoes of a lien creditor. Page v. Old Dominion Trust Co., 257 F. 402, 168 C. C. A. 442.

[3] Barker claims, further, that he is a creditor of Joe S. Kite, not of Joe S. Kite Company; that the assets of Joe S. Kite were illegally turned over to the corporation; and that he has the right of payment

therefrom in preference to the creditors of the corporation. The basis of this claim is that the stock of goods and other assets of Joe S. Kite were sold and turned over to the corporation in February, 1922, without the notice to him as a creditor required by section 5187 of the Virginia Code of 1919, and without compliance with that statute in other particulars. It seems clear that the failure to comply with the statute cited is not available to Barker for at least two reasons: He dealt with the corporation as his debtor, substituted for Kite personally. The statute limits the time within which a creditor may attack such a transfer to six months. The transfer to the corporation was made more than six months before Barker attacked it.

[4] As already stated, the original debt owed Barker was $29,893.56. It is not disputed that the amount remaining due on the original debt, after allowing all proper credits, including the $3,400 of purchase money of the collateral notes bought by Barker, was correctly found by the District Judge to be $11,485.17, as of January 12, 1923. But Barker claims that the bankrupt corporation as indorser is liable to him in the purchased, at the sale made by Kelly, trussum of $28,776.60 on the collateral notes tee. The form of the indorsement or trans

fer of these notes to the trustee does not

clearly appear. But we think, when the agreement of sale by Barker to Kite is read as a whole, it clearly appears that it was not the intention of the parties that Kite should incur the double liability of maker of the original notes and indorser of the collateral notes. Kite promised to pay $29,893.56 and to "deposit" "as collateral security solvent notes approved by the trustee which are secured by valid chattel mortgages or retention of title of automobiles sold." This expression of the nature of the security negatives the intention that Kite should be liable not only for the purchase money of Barker's interest in the business, but also as an unqualified indorser on the collateral. We express no opinion whether Kite or Kite Company would have been liable as indorser of the collateral notes to a third person purchasing them.

Affirmed.

THE LIZZIE M. WALKER.

THE VIRGINIA.

(Circuit Court of Appeals, Fourth Circuit. January 6, 1925.)

Nos. 2303, 2304.

1. Towage 19-Tug, contracting to take full charge of navigation of scow, held responsible for maintaining proper lights thereon.

Where the owner of a tug contracted to transport a scow, and to take entire charge of its navigation, the owner, having no representative thereon, was responsible for its seaworthiness, and the tug for its navigation and for placing lights thereon necessary for its safety, and the safety of other vessels.

2. Collision 95(4)-Steamer held solely in fault for collision with tow at night.

A collision at night on a river between a scow in tow and a meeting steamer held due solely to the fault of the steamer, which, ignoring the lights on the tug, showing that she had a tow, after passing, turned across her course, striking the side of the scow at right angles. While the tug was also in fault for maintaining only a single light on the scow, such fault did not contribute to the collision. 3. Collision 104-Where fault of one vessel is gross, contributory fault must be clearly

shown.

Where the fault of a vessel for collision with the tow of another is gross, and manifestly the cause of the collision, any doubt as to contributory fault of the towing tug should be

resolved in its favor.

Appeals from the District Court of the United States for the District of Maryland, at Baltimore; Morris A. Soper, Judge.

Suit for collision by H. L. Walker, owner of the Scow B, against the Baltimore Transportation Company, owner of the tug Lizzie M. Walker, and the Baltimore, Chesapeake & Atlantic Railway Company, owner of the steamboat Virginia. Decree for libelant against both respondents, and each appeals. Modified.

John H. Skeen, of Baltimore, Md. (Emory, Beeuwkes & Skeen, of Baltimore, Md., on the brief), for Baltimore Transp. Co. Ralph Robinson, of Baltimore, Md., for Baltimore, C. & A. Ry. Co.

George W. P. Whip, of Baltimore, Md. (Lord & Whip, of Baltimore, Md., on the brief), for H. L. Walker.

down the river, struck and sunk the scow. The tug was owned by the Baltimore Transportation Company, the scow by H. L. Walker, and the steamer by the Baltimore, Chesapeake & Atlantic Railway Company. The District Court held the owner of the scow blameless and the owners of both the tug and the steamer at fault.

[1] At the time of the collision there was only one light on the scow. Its owner did not undertake to furnish lights nor did he have any representative on it. The owner of the tug had contracted to transport the scow and to take entire charge of its navigation. Under such conditions the owner of the scow was responsible for its seaworthiness; the tug was responsible for the navigation of the scow and for placing lights necessary for its safety and the safety of other vessels. Sturgis v. Boyer, 24 How. 110, 122, 16 L. Ed. 591; The Connecticut, 103 U. S. 710, 713, 26 L. Ed. 467; Bisso Towboat Co. v. Alabama & New Orleans Transportation Co. (C. C. A.) 271 F. 658, 660; In re Walsh, 136 F. 557, 559, 69 C. C. A. 267. In The Lyndhurst (D. C.) 92 F. 681, The Nettie L. Tice (D. C.) 110 F. 461, The Eugene F. Moran (D. C.), The Charles E. Matthews, The Scows 15D and 18D, 143 F. 187, 154 F. 41, 83 C. C. A. 153, and 170 F. 928, 96 C. C. A. 144, the scows were held liable for collisions due to the absence of lights required by the rules of navigation, for the reason that there were persons on the scows representing their owners. In The Komuk (D. C.) 120 F. 841, where the tow was held liable along with the tug, it does not appear that the owner of the tow had a representative on it. In Foster v. Merchants' & Miners' Transportation Co. (D. C.) 134 F. 964, the tug and tow were held liable for the absence of lights on the tow, but there was no discrimination between them for the reason that they had the same owner.

The contention that the owner of the scow is responsible because he did not provide a place for the lights is not well .founded. The evidence showed that the lights could be sufficiently attached with three or four nails and a scantling, and

WOODS, Circuit Judge. On the night of January 20, 1923, the tug Lizzie M. Walker, having in tow the empty scow B on a hawser of 300 feet, was steaming up the Choptank river on the eastern store of Maryland. The steamer Virginia, going

We think, therefore, the District Judge was right in exempting the owner of the scow and placing the responsibility for the lacking light on the owner of the tug.

[2] The collision occurred night. The night was dark. of the wind was variously from 3 to 10 miles an hour.

about midThe velocity estimated at

When the

- course.

steamer and tug were more than one mile apart the officers of each saw the lights of the other vessel. The one blast signal of the Virginia for port to port passing was assented to by the tug. The officers of the steamer, as the District Judge found, observed, or should have observed, the lights of the tug, indicating that she had a tow in charge, and had ample time to make such change of course as was necessary to pass safely the tug and tow. There was an abundant expanse of deep water on the steamer's starboard side for a change of The tug, though the incumbered vessel, changed its course to the south so as to give a wider passage. Notwithstanding this advantageous change by the tug, the Virginia, after giving the passing signal, changed her course so little, if at all, that she cleared the tug by only 150 feet at the most. This too, with the knowledge of the presence of the tow and of the change of course of the tug. It was obvious to the navigator of the Virginia, if he observed at all, that the wind would drive the tow to the leeward of the tug and towards the course of the steamer, and that a passing within 150 feet of the tug would almost inevitably result in collision with the tow. No excuse appears for this reckless navigation on the part of the steamer which brought about the collision. The liability of the steamer is therefore beyond doubt. Did the tug negligently contribute to the collision? The evidence shows conclusively the tug's violation of the rule of navigation requiring white lights to be carried at each end of the scow. There was a light on the after starboard corner of the scow, but none on the bow end. The towing lights on a tug give notice to other vessels of the presence of a tow; the two lights required on the tow itself enable observers on other vessels to locate the tow more accurately. One light on a tow does not enable an observer on another vessel to tell whether the light is forward or aft. Thus the observers on the Virginia may have been deceived as to the location of the scow by 100 feet and 10 inches, the length of the scow. But when they saw the towing lights of the tug and the one light of the scow they could not have been misled as to the location of the approaching scow by more than its length. Assuming that the navigating officers of the steamer were deceived by the presence of only one light into the belief that the scow was 100 feet further out of the course of the steamer than it really was, that does

not show that the absence of the second required light contributed to the collision. The argument that it did is answered by the significant fact that the steamer struck the scow at an almost exact right angle with its side. This shows plainly that the navigators of the steamer, totally ignoring the presence of the scow of which the towing light of the tug gave them notice, took their course directly across the wake of the tug. Had they recognized the presence of the tow and taken a course parallel to its course and that of the tug the steamer could not have had a right angle collision with the scow. When the navigators of the Virginia totally disregarded the towing lights which were on the tug and scow, there is no ground for them to say they would have heeded if there had been another light on the scow.

The unexplained grounding of the steamer after the collision is also evidence of the incompetency or negligence of her navigators.

It is true that the failure of the tug to place the statutory lights on the scow was a serious fault, and, if the circumstances showed that it could have contributed to the collision, all doubt would be solved against the tug, and the absence of the light would be held a proximate cause of the collision.

[3] The unexplained close and obviously dangerous approach of the steamer to the tug with no reduction of speed, the disregard of the tug's towing lights, the course of the steamer astern of the tug, the right angle collision with the scow taken together, show a reckless disregard of the rules of safety on the part of the steamer. This recklessness, and not the absence of another light on the scow, brought about the collision. The fault of the steamer being so gross, and so manifestly the cause of the collision, any doubt of the contribution of the fault of the tug for the collision should be solved in its favor. The Victory & The Plymothian, 168 U. S. 410, 423, 18 S. Ct. 149, 42 L. Ed. 519; The Umbria, 166 U. S. 404, 409, 17 S. Ct. 610, 41 L. Ed. 1053.

We are reluctant to differ with the District Judge as to the effect of the fault of the tug, but, since we are in agreement with him as to the facts, we feel the more free to draw from them a different inference. We think the steamer was solely responsible for the collision, and the decree of the District Court is modified accordingly. Modified.

(Circuit Court of Appeals, Fifth Circuit. January 6, 1925.)

1. Shipping

No. 4295.

209(1)-Denial of limitation of shipowner's liability held not to release surety on stipulation.

Denial of limitation of shipowner's liability under Rev. St. § 4284, as amended by Act Feb. 21, 1877 (Comp. St. § 8022), and section 4285 (Comp. St. § 8023), and admiralty rules 51-53, does not release what has been brought into court by shipowner to be subjected to claims allowed, or convert proceeding into one purely in personam; hence liability of surety on stipulation was not released by such denial.

2. Shipping 209(1) -Stipulation for value given by shipowner seeking limitation of liability is substitute for vessel and freight.

Stipulation for value given under admiralty rule 51, by shipowner seeking limitation of liability, is substitute for vessel and its freight. 3. Shipping 209(1) -Claimants may waive

appraisement and treat ad interim stipulation

as substitute for vessel and freight.

Where shipowner, petitioning for limitation of liability, filed an ad interim stipulation as to value of his interest, claimants could waive an

appraisement, acquiesce in shipowner's statement of values of vessel and freight, and treat the ad interim stipulation as a substitute for the vessel and freight, and where they did, there was no error in ordering amount stipu

lated paid into court for application on al

lowed claims.

Appeal from District Court of the United States for the Southern District of Texas; Joseph C. Hutcheson, Judge.

Petition by owner of tank barge Bolikow for limitation of liability. From so much of the decree denying petition and sustaining claims of the Southern Pacific Company and others, in whole or in part, and requiring the Hartford Accident & In

demnity Company of Hartford, as surety, to pay into court the amount stated in an ad interim stipulation for value of vessel and freight, such surety appeals. Affirmed. John Neethe, of Galveston, Tex. (Williams, Neethe & Williams, of Galveston, Tex., on the brief), for appellant.

W. T. Armstrong and W. E. Cranford, both of Galveston, Tex. (Burlingham, Veeder, Master & Feary, of New York City, and Terry, Cavin & Mills, of Galveston, Tex., on the brief), for appellees.

Before WALKER and BRYAN, Circuit Judges, and CLAYTON, District Judge.

WALKER, Circuit Judge. The owner of the oil tank barge Bolikow filed its peti

tion for a limitation of its liability in respect of claims arising out of an alleged explosion on and burning of that barge. That petition contained prayers to the following effect: That the court will cause due appraisement to be made of the amount of the value of petitioner's interest in said barge after said explosion, and at the time of the cessation of the burning of said barge, as the result of said explosion, and make an order for the payment of such amount into court, "and granting leave to the petitioner to file an ad interim stipulation pending the appraisal of the petitioner's said interest in said barge Bolikow and her pending freight, if any"; that the court will issue a monition to all persons having claims for loss or damage caused by said explosion and burning to present and make proof of their claims in the proceeding instituted by the filing of said petition; and that the court issue an injunction restraining the commencement or prosecution, except in this proceeding, of any suit or action by the claimant named in the petition, or any other person or persons who may have or claim to have any cause or causes of action against said barge or its owners, arising out of said explosion or burning.

Upon the presentation of the petition, accompanied by an affidavit showing that the value of the burned hulk of said barge, which was all of the barge or its cargo that was saved or salved after such explosion and burning, was the sum of $250, and that the freight on said barge pending at the time of said disaster did not exceed the sum of $11,076.85, the court made the following order:

"Ordered, that the petitioner file herein an ad interim stipulation for the value of said barge Bolikow, her tackle, apparel, equipment, etc., with the maximum possible amount of the pending freight at the termination of the said fire on said barge Bolikow and of the said voyage on which said barge Bolikow was engaged at the time of the said disaster, in the sum of $11,326.85, with interest from the said 23d day of December, 1920, the date of the aforesaid explosion, with surety according to the rules and practice of this court; and it is further ordered, that any party may apply to have the amount of the stipulation so increased or diminished, as the case may be, on report of the commission appointed to appraise the amount of the petitioner's interest in the said barge Bolikow and her pending freight, if any, or on the ultimate