consumers, and apply the same to the necessities of their business upon security being given. We are convinced that, considering the prevailing rates for money in this community, it is not advisable longer to retain the excess over statutory rates, where it can earn no more than the interest usually allowed by banks and trust companies on such deposits. The plaintiffs therefore (other than the Brooklyn Union subsidiaries) may severally enter orders as follows: 1. On and after December 1, 1920, and during the pendency of this suit, or until the further order of the court, plaintiff is authorized and permitted to charge to and collect from private consumers of gas a price not exceeding $1.10 per 1,000 cubic feet, anything in previous orders of the court to the contrary notwithstanding. 2. The moneys now on deposit to the credit of this cause and in charge of Richard Welling, Esq., special master, may, as soon as is convenient after the entry of this order, be paid over, both as to principal and accrued interest, by such special master to plaintiff herein upon its receipt, but on the following conditions: 3. There shall first be paid to the said Richard Welling on account of his services as special master a sum to be fixed in the order to be entered hereunder. 4. In respect of the moneys so paid by said special master to the plaintiff, said plaintiff on receipt thereof shall give a bond or bonds with sureties to be approved by any judge of the District Court for the Southern District of New York, conditioned to pay in the aggregate the amount received, together with interest thereon at 6 per cent. from December 1, 1920, on the demand of said special master or any successor appointed in his place, and further conditioned, in the event of such payment not being made within ten days after such demand, that judgment shall be forthwith entered both against the plaintiff and the surety or sureties as by confession for the amount secured by said bond with interest as aforesaid and costs of entry. No one surety shall give bond for more than $500,000. 5. On the 15th of January, 1921, and on the 15th of each month thereafter during the pendency of this suit, or until the further order of the court, the plaintiff shall report to the special master herein the amount of the difference between the statutory rate and $1.10 per 1,000 cubic feet collected by it, together with a verified declaration that the said amount is all that has been collected during the preceding month; and the said special master shall file the same in the clerk's office in these suits. 6. Contemporaneously with the report and statement hereinabove required on the 15th of each month, beginning January 15, 1921, the plaintiff may at its option (a) pay in cash the amount so reported to said special master to be by him retained and deposited on the terms of the orders heretofore entered and so held until final decree or the further order of the court; (b) execute and deliver to the said special master a bond with surety or sureties for the payment of the amount stated in said report with 6 per cent. interest annually from date of report to said special master, when and as required by the court and (269 F.) on demand, substantially in the form hereinabove directed in respect of the moneys now on deposit with said special master; or (c) it may deposit with the special master bonds of the United States, and/or bonds in which savings banks are authorized to invest under the laws of the state of New York, or both, of a value at the market price, plus accrued interest, equal to at least 103 per cent. of the amount so reported month by month. And the special master is hereby required to demand and exact from the plaintiff, as each month's report is made and bonds as aforesaid deposited, further and additional bonds by way of security, to the end that there shall always be on hand in the master's possession bonds equaling at the market, including interest, a value equal to 103 per cent. of all the excess collection so reported, together with interest at 6 per cent. on such excess to a date one month later than the date of such demand. To the extent above indicated plaintiff's motions are severally granted; and in the cases of the Brooklyn Union subsidiaries similar orders may be entered, including, however, the declaration (not heretofore made) that chapter 125 of the Laws of New York of 1906 has become and is at the present time confiscatory; and defendants are enjoined, until the further order of this court, from enforcing the same. The terms of the orders heretofore entered shall continue to cover collections down to and including the month of November, 1920, with the additional privilege in plaintiffs of substituting for the deposits surety bonds and/or bonds of the United States, and/or bonds in which savings banks are authorized to invest under the laws of New York. The orders now to be entered will be effective thereafter and until final decree or the further order of the court. UNITED STATES v. BUSH et al. (District Court, W. D. New York. December 16, 1920.) 1. Criminal law 395-Property obtained by illegal search and seizure cannot be used as evidence of crime. The Fourth and Fifth Amendments to the Constitution protect the citizen from the use against him as evidence of crime, not only of private books and papers, but of any article or property obtained by means of an illegal search and seizure. 2. Indictment and information 10-Indictment cannot be based on evidence obtained by illegal search and seizure. An indictment for receiving stolen property cannot be based on evidence found and seized by government agents while searching defendant's dwelling for intoxicating liquors under an illegal warrant. 3. Indictment and information 10-Indictment based on evidence illegally obtained held invalid. That a defendant was arrested by a city police officer does not validate a federal indictment based solely on evidence obtained by federal agents through an illegal search and seizure. Criminal prosecution by the United States against Catherine Bush and another. On motion to quash indictment. Motion sustained. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes Stephen T. Lockwood, U. S. Atty., of Buffalo, N. Y. (John T. Walsh, Sp. Asst, U. S. Atty., of Buffalo, N. Y., of counsel), for the United States. William W. Dickinson, of Buffalo, N. Y., for defendants. HAZEL, District Judge. The defendant Catherine Bush was indicted for criminally receiving stolen property in violation of the socalled Carlin Act passed by Congress in 1913. At a preliminary hearing before Commissioner Keating she was discharged on the ground that the evidence against her was procured by an unreasonable search and seizure. The conceded facts are that prior to the arrest prohibition enforcement agents with an invalid search warrant searched the premises of the defendants for intoxicating liquors, and in doing so discovered a case of stolen underwear. They arrested the defendants, notified the railroad police, and the underwear was seized. The commissioner decided, not only that the seizure was in violation of the constitutional rights of the accused, but also that the search warrant was invalid. [1] It is contended by the United States attorney that the search for and seizure of stolen articles is governed by a different principle from that of the seizure of private books and papers; that in Boyd v. U. S., 116 U. S. 616, 6 Sup. Ct. 524, 29 L. Ed. 746, the Supreme Court clearly differentiated searches and seizures of one's private papers and of stolen property. But I am of opinion that the principle of law laid down in the Boyd Case applies generally to search and seizure of one's house, property, and effects, and is not limited to the seizure of a man's private papers to be used as evidence against him. There is language found in the opinion from which it may be supposed that a distinction exists between seizure of a man's private papers to be used against him and a search and seizure of stolen goods. The private papers of an individual cannot be seized at all to incriminate him, while stolen goods are subject to search and seizure on a proper warrant. The Fourth and Fifth Amendments must be read together, and upon doing so it is ascertained, I think, that in the Boyd Case the Supreme Court not only decided the law with reference to unlawful search and seizure of one's books and papers, but also that it was an invasion of the rights of personal security to enter one's home and rummage his boxes and drawers in the search for property, and an extortion "of a man's own testimony or of his private papers to be used as evidence to convict him of crime." [2] In the present case the seizure consisted not only of taking the underwear in the possession of the accused without a valid search warrant, but the effect of the search and seizure was to compel the defendant Catherine Bush, by reason of her possession, to give evidence against herself without which concededly the indictment would not have been found. It is a general rule that nothing will justify searching a dwelling for stolen property without a warrant for that purpose unless consented to by the person whose domain is under search. 35 Cyc. 1267. The basis for the issuance of a search warrant to recover (269 F.) stolen goods has only slightly been changed by statute, since Lord Camden rendered his notable decision in Entick v. Carrington, 19 Howell's State Trials, 1029, wherein he quotes from Lord Coke: * "There must be a full charge upon oath of a theft committed. The owner must swear that the goods are lodged in such a place. He must attend at the execution of the warrant to show them to the officer, who must see that they answer the description." In Weeks v. U. S., 232 U. S. 383, 34 Sup. Ct. 341, 58 L. Ed. 652, L. R. A. 1915B, 834, Ann. Cas. 1915C, 1177, the Supreme Court says: "The United States marshal could only have invaded the house of the accused when armed with a warrant issued as required by the Constitution, upon sworn information and describing with reasonable particularity the thing for which the search was to be made." Hence a search for stolen goods upon a valid warrant and seizure is a legal procedure, but a search and seizure is illegal and unreasonable under the Fourth Amendment of the Constitution, when conducted without first obtaining a legal warrant upon probable cause, supported by oath or affirmation, and as the Constitution provides, particularly describing the place to be searched and the person or things to be seized. Evidence obtained by an invalid search and seizure to prove possession is in effect a requirement that the accused be a witness against himself. Silverthorne Lumber Co., Inc., v. U. S., 251 U. S. 385, 40 Sup. Ct. 182, 64 L. Ed. 319; Flagg v. U. S., 233 Fed. 481, 147 C. C. A. 367. Indeed, in the Flagg Case clues, leads, and information developed from an illegal search and seizure were held inadmissible against the defendant. See, also, Edelstein v. U. S., 149 Fed. 636, 79 C. C. A. 328, 9 L. R. A. (N. S.) 236. [3] The government next contends that the arrest was made by a city police officer, a stranger to the proceedings, and therefore this court should not inquire into the manner in which the evidence was obtained. Adams v. N. Y., 192 U. S. 585, 24 Sup. Ct. 372, 48 L. Ed. 575; Youngblood v. U. S. (C. C. A.) 266 Fed. 795. The facts, however, are not widely different from the Flagg Case, where the evidence was brought to the federal building by a policeman who acted, the court held, as agent of the government. It makes no difference that a city police officer actually made the arrest in the belief that a felony had been committed. Certainly the clues and leads and information necessary to find the indictment were procured by government officials. In People v. Kinney, 185 N. Y. Supp. 645, recently decided by Judge Brown, of the Supreme Court of the state of New York, it was shown that a policeman having a search warrant authorizing a search of the home of the defendant for opium in conducting the search found a concealed loaded revolver, seized it, and later an indictment was found against defendant for having in his possession a revolver without a permit. The indictment on motion was dismissed. So here the officers possessed no proper search warrant for searching the home of the accused and seizing any stolen property, and therefore their discovery or information unlawfully acquired could not be used as a basis for an indictment for criminally receiving stolen property. Since the evidence before the grand jury was clearly based upon insufficient and incompetent evidence and disregarded the rights of the accused, the indictment must be, and it hereby is, quashed. UNITED STATES v. CHRISTINE OIL & GAS CO. (District Court, W. D. Louisiana. September 8, 1920.) 1. Internal revenue ~7-Deferred payments not taxable as "income.” Within Revenue Act Oct. 3, 1913, levying a tax on the net income arising or accruing from all sources in the preceding calendar year, section 2G (b) of which requires the income to be ascertained by deducting from the gross amount of income received within the year expenses paid and losses sustained within the year, "income" includes only what has actually been received, so that a corporation which sold property at a profit during the year is not liable to taxation on deferred payments of the property not represented by notes or secured in any way. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Income.] 2. Internal revenue ~7—Treasury rulings cannot add to taxable income. The regulations and rulings of the Treasury Department, under its authority to make reasonable regulations for the execution of the Income Tax Law, cannot enlarge the net income of a corporation subject to the tax by the terms of the act. Suit by the United States against the Christine Oil & Gas Company to collect a tax. Verdict directed for defendant. Joseph Moore, U. S. Atty., of Shreveport, La. J. D. Wilkinson, of Shreveport, La., for defendant. GRUBB, District Judge. The question involved in this case is the right of the government to collect from the defendant an income tax on the deferred payments for the sale of oil leases. The deferred payments were the obligations of the Producers' Oil Company, a solvent corporation, not represented by notes or secured in any way. The sale undoubtedly established a profit on the transaction, represented by the difference between the cost, $115,000, and the sale price, $250,000. About $79,000 was paid in cash, and $25,000 thereafter out of the proceeds of oil. The corporation paid income tax only upon the payments actually received and was additionally assessed $1,328.13 on the unpaid part. The dispute arises as to the correctness of the additional assessment on the part that has never been received by the corporation. It may be conceded that the difference between the cost price and the sale price, if received during the tax year for which the additional assessment was made, would be income, subject to the tax. [1] Section 2G (b) of the Act of October 3, 1913 (38 Stat. 114), prescribed the method of arriving at the income on which the tax against a corporation is to be assessed as follows: "Such net income shall be ascertained by deducting from the gross amount of the income of such corporation, received within the year from * For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes |