Trust Co. v. Stone, 107 Fed. 305, 46 C. C. A. 299. In the former case Judge Taft said:

"Equity will not relieve against an assessment merely because it happens to be at a higher rate than that of other property; that such inequalities, due to mistake, to the fallibility of human judgment, or to other accidental causes, must be borne, for the reason that absolute uniformity cannot be obtained: * * ** in other words, what may be called 'sporadic cases of discrimination' cannot be remedied by the chancellor. He can only interfere when it is made clear that there is, with respect to certain species of property, systematic, intentional, and unlawful undervaluations for taxation by the taxing officers, which necessarily affect an unjust discrimination against the species of property of which the complainant is an owner. The reason for this distinction is obvious. The occasional and accidental discriminations are inevitable in every assessment, and are not likely to continue, because not the result of an illegal purpose on the part of any one. If equitable interference in such cases could be invoked, the obstruction to the collection of taxes would be so frequent as to be intolerable. More than this, an action to enjoin a tax is a collateral attack upon the judgment of a quasi judicial tribunal, and it cannot be justified except on the ground of an obvious violation of law, or something equivalent to fraud. It does not where the injury complained of arises only from the erroneous, but honest, judgment of the lawfully constituted tax tribunal. The interference by the chancellor in the case at bar and in the Cummings Case rests on something equivalent to fraud in the tribunal imposing the tax. The various boards whose united action is by law intended to effect a uniform assessment on all classes of property are to be regarded as one tribunal, and the whole assessment on all classes of property is to be regarded as one judgment. If any board which is an essential part of the taxing system intentionally, and therefore fraudulently, violates the law by uniformly undervaluing certain classes of property, the assessment by other boards of the other classes of property at the full value, though a literal compliance with the law, makes the whole assessment, considered as one judgment, a fraud upon the fully assessed property. And this is true although the particular board assessing the complainant's property may have been wholly free from fault or intentional discrimination."

In the other case Judge Day said:

"It may be conceded that, if the allegations of the bill are made out, there exists in respect to the property of complainant and others similarly situated, a systematic, intentional, and illegal undervaluation of other property by the taxing officers of the state, which necessarily effects an injurious discrimination against the property of which the plaintiff is the owner, and a bill in equity will be to restrain such illegal discrimination, and in such cases federal jurisdiction will arise because of the equal protection of the laws guarantied by the fourteenth amendment."

These two decisions are binding upon us as to what is the true rule applicable to such cases. Counsel for defendants cite a number of authorities, principally from the Supreme Court of the United States, in which the rule is laid down in different phraseology. It is unnecessary for us to consider these cases, and see whether they lay down any different rule, for those cases were considered in the two specially referred to, and it was therein determined that the rule as herein laid down was authorized and required by those cases. From these statements of the rule we gather that, in order that one whose property has been fully valued may complain of an undervaluation of other property, and entitled to have the valuation of his property cut down to such undervaluation, two things are essential. One is that the undervaluation should have been intentional. By this is meant that the valuation at less than the full value should have been intended. This,

and nothing more. The other is that the undervaluation should have been systematic or habitual; i. e., relate to a large species of property. An undervaluation that is intentional, but that is not systematic or habitual, cannot be complained of by such person. Possibly he could not complain of one that was systematic or habitual if it was not intentional. But it is hardly probable that an undervaluation could be Systematic or habitual, and not be intentional. Probably, then, the essential features of an illegal discrimination of the character under consideration is that there should have been a systematic or habitual undervaluation. An undervaluation that is not so cannot be complained of though intentional, and an undervaluation that is so cannot but be intentional. Just how large the class to which the undervaluation relates must be it is not necessary to determine, for there can be no question but that the class undervalued here was large enough. Counsel for defendants seem to urge that it is essential that there should have been an agreement or combination between the different officers making the undervaluation to undervalue in order that the discrimination may be illegal. It is sufficient that, as a matter of fact, they systematically and habitually undervalue that portion of the property with which they have to do, even though there be no understanding or agreement between them so to do. Counsel for defendants seem further to urge that it is essential that the complainant have company; or, in other words, that it is not sufficient that a single taxpayer be fully valued, but the others belonging to the same class must have been fully valued also. We do not think so.

The fact that all of his own class have been undervalued also but makes his case the stronger.

The quotations cited from certain authorities which lend color to these two positions should be construed in the light of the facts of the particular cases in which the language quoted was used.

cent.

Does this case, then, present an illegal discrimination within the requirements of the rule as thus laid down? We think it does. The property subject to equalization, being 77 per cent. of the taxable property in this state, was systematically, habitually, and intentionally undervalued to at least the extent of 20 per cent. for the year 1902, first by the local assessing officials and then by the equalizers. Not only this, but the Legislature of the state, by its latest expression on the subject, provided that it should be undervalued as much as 30 per by the equalizers. So far as complainant having company in being fully valued is concerned, that is immaterial, as we have stated. But, though the evidence does not disclose how, relative to value, the intangible property of other corporations subject to the jurisdiction of the Board of Valuation and Assessment was assessed for the same year, it is reasonable to infer that they have been assessed on the same basis as complainant; i. e., at what the board considered to be the full value of said property. It is so alleged in the bill, and there is no evidence to the contrary.

It remains to consider several reasons urged by counsel for defendants why, notwithstanding the conclusions already reached, the complainant should be denied the relief it seeks.

1. It is claimed that the bill does not allege facts sufficient to bring the discrimination complained of within the rule as to what is essen

tial to constitute illegal discrimination in such cases; or, in other words, that it is not alleged that the undervaluation of the property subject to equalization was systematically, habitually, and intentionally made. It is true that these words are not used, and the bill might have been fuller in this particular. It does, however, use language that is equivalent thereto. It alleges that the assessors of the various counties in the state uniformly assessed said property below its value, in 'many instances below 50 per cent., in over 90 per cent. below 80 per cent., and in very few counties above its value; and that the equalizers undertook to equalize all assessments coming before them on the basis of 80 per cent., but in reality did not equalize them at above 80 per cent. of their value. According to these allegations, the assessments of said property after equalization could not but have been systematically, habitually, and intentionally undervalued.

2. It is claimed that the bill should be dismissed because before bringing suit complainant did not pay or tender the amount which would be coming to the various counties, cities, towns, and taxing districts. on account of that portion of the assessment of the intangible property not complained of herein. It did pay the amount of the tax due thereon to the state, but did not pay or tender to said local divisions the amounts which would be coming to them, respectively, on account of said portion of the assessment. Complainant advances two reasons. why it was not bound to make such tender. One is that there has been no apportionment of said assessment, or any part thereof, by the Board of Valuation and Assessment, whose duty it was to make the apportionment. Hence the taxes on account of said portion of said assessment cannot be said to be due, and the amount thereof is not ascertainable until said apportionment. The other is that the question as to whether such an assessment is subject to apportionment had been put in suit, and had not then been decided by the court. We presume that reference is had to the case of Southern Ry. in Kentucky v. Coulter (Ky.) 68 S. W. 873. This case, however, was decided by the Court of Appeals June 10, 1902, which was before the bringing of this suit. But we think that for the first reason the point urged by defendants in this particular is not well taken.

3. It is urged that the ordinary taxpayers of the state have paid 50 cents on the $100 under the act of March 29, 1902, and complainant only 471⁄2 cents, and that, therefore, complainant should not be entitled to the relief it seeks. This makes a difference only of $250 on the million, and is insignificant as compared with the difference complained of herein. But, to say the least, it is questionable whether the ordinary taxpayers were bound to pay more than 472 cents, and it will take a lawsuit to settle the question. We do not think that complainant should be denied relief sought on this ground.

This disposes of every question made in this case. We are aware that perfect uniformity and perfect equality of taxation is a baseless dream; that the fourteenth amendment was not intended to compel the states to adopt an iron or cast-iron rule of equal taxation, and that, as said by Mr. Justice Harlan in the case of King v. Mullins, 171 U. S. 436, 18 Sup. Ct. 925, 43 L. Ed. 214: "The judiciaries should be very reluctant to interfere with the taxing system of a state, and should

never do so unless that which the state attempts to do is a palpable violation of the constitutional rights of the owners of property. The way we view it, to permit the valuation of complainant's intangible property as made to stand would be a palpable violation of its rights. It is an attempt to make it pay on a 100 per cent. valuation when the bulk of the taxpayers pay on not exceeding an 80 per cent. valuation. This of itself is sufficient to require that this court should intervene. Particularly is this so when it is considered that there is a possibility, at least, that the valuation of its intangible property may include the skill and efficiency with which its affairs are managed, and the personalty of individuals not subject to equalization largely escapes taxation

at all.

We conclude, therefore, that complainant is entitled to the relief it seeks.

RYTTENBERG v. SCHEFER et al.

(District Court, S. D. New York. May 23, 1904.)

1. USURY-COMMISSIONS FOR USE OF CREDIT.

A commission charged by one commission house to another for the use of its credit under an arrangement by which it guarantied all consignments sent to the second house did not constitute usury.

2. BANKRUPTCY-PREFERENCE.

A bankrupt cannot be held to have given a preference, recoverable by his trustee, because of sums collected by a creditor after the bankruptcy from third persons under a contract which had been in force between the bankrupt and the creditor for a number of years.

3. CONTRACT-VALIDITY.

A contract by which a bankrupt commission firm, some years before its bankruptcy, agreed to do all its business through another firm, obtaining the benefit of the latter's credit, held not invalid, as a scheme to hinder, delay, or defraud its creditors.

4. BANKRUPTCY-JURISDICTION OF COURTS-SUIT BY TRUSTEE.

A court of bankruptcy has jurisdiction by consent of a suit by a trustee to recover a fund for the estate, under Bankr. Act July 1, 1898, c. 541, § 23, 30 Stat. 552 [U. S. Comp. St. 1901, p. 3431], where the defendant appears generally and answers to the merits.

5. FACTORS-LIEN-EFFECT OF CONTRACT BETWEEN COMMISSION HOUSES.

A commission firm some years before its bankruptcy entered into a contract by which it agreed to do all its business through defendants, Composing a second firm, to whom all goods should be consigned, and in whose name all sales and collections were to be made. Defendants were to make advances on consignments, and be responsible therefor. A lease for premises occupied by the bankrupt was assigned to defendants, but the rent therefor was to be paid by the bankrupt, which was to continue to occupy them and carry on the business therein at its own expense. At the time of the bankruptcy there were goods on the premises or in warehouse in the bankrupt's name, some of which had been consigned in defendants' name, and some purchased by the bankrupt, but on all of which defendants had made advances. There were also accounts due for goods sold, made payable to defendants by directions on the invoices sent to purchasers. Held, that the consigned goods were in the possession of defendants, who had a lien thereon, as well as on the accounts due for such goods sold, for their advances and charges, but that goods bought by the bankrupt must be considered as having been in its own possession--the 1. See Usury, vol. 47, Cent. Dig. § 72.

premises being its own, as between it and defendants-and that defendants, lacking possession, had no lien either upon such goods, or accounts due for those sold, although, as in case of the other accounts, there was a direction on the invoices that they should be paid to defendants, and the bankrupt rendered a periodical statement to defendants, in which all goods were treated as having been consigned to defendants, and all accounts as being their property.

6. EQUITABLE LIEN-INVALIDITY OF LEGAL LIEN.

Where parties attempted by an agreement to give one a factor's lien on property of the other, but such agreement did not create a lien, because possession of the property remained in the debtor, an equitable lien will not arise, although the agreement was made in good faith.

In Equity.

Morris J. Hirsch (Benjamin N. Cardozo and Herbert H. Maass, of counsel), for complainant.

Carter, Hughes, Rounds & Schurman (Charles E. Hughes and Richard E. Dwight, of counsel), for defendants.

HOLT, District Judge. This is a suit in equity brought by the trustee of the firm of Radon & Co., bankrupts, against the members of the firm of Schefer, Schramm & Vogel, to determine the ownership of a fund. Radon & Co. were engaged in the business of commission merchants and dealers in woolen goods, in the city of New York. On December 7, 1897, they made a written agreement with the firm of Schefer, Schramm & Vogel, who were commission merchants in New York, which agreement provided as follows:

"1. Radon & Co. agree to transact all their business through Schefer, Schramm & Vogel. The lease of the premises at 530 Broadway, now occupied by Radon & Co. shall be assigned to Schefer, Schrammi & Vogel. All goods at present consigned or owned by Radon & Co. shall be consigned by their respective owners to Schefer, Schramm & Vogel as factors for sale upon commission.

"2. Schefer, Schramm & Vogel agree, on the request of Radon & Co., to ad-j vance to the respective consignors two-thirds of the net market value of the goods respectively consigned. Account sales shall be furnished to said consignors monthly and Schefer, Schramm & Vogel agree to discount such sales for the respective consignors.

"Schefer, Schramm & Vogel shall be entitled to a commission of two and one-half per cent. on the net amounts of sales, and interest in the accounts current with said consignors shall be charged and credited at the rate of six per cent. per annum.

"3. Radon & Co. agree to take charge of all said con igned goods for Schefer, Schramm & Vogel and of the sale of said goods, and shall defray all the expenses incident to such sale or to the business conducted at 530 Broadway, including the rent of said premises and the premiums for insurance on the said consigned goods, and shall reimburse Schefer, Schramm & Vogel for all payments made by them for any such expenses. But all sales shall be under the supervision of Schefer, Schramm & Vogel and shall be made in their name and on their behalf, and all goods sold shall be charged on bill heads reading 'Bought of Schefer, Schramm & Vogel.' The terms of sale shall in no ́case exceed four months from date of bills. Radon & Co. shall furnish to Schefer, Schramm & Vogel monthly accounts of sales made for the respective consignors. "4. Schefer, Schramm & Vogel do not assume the risk of overadvances and Radon & Co. shall be liable to Schefer, Schramm & Vogel for any loss which may accrue by any such overadvances. An account shall be kept between Schefer, Schramm & Vogel and Radon & Co. which shall be called 'Radon & Co. Guarantee Account.' In this account Radon & Co. shall be charged with