In Equity. Suit by the Southern Pacific Company against the City of Calexico afid others.

In an action in the nature of interpleader, brought under section 18 of the Act of Congress of August 29, 1916 (Comp, St. § 8604ii), plaintiff alleges that there was delivered to it, on or about March 23, 1922, at Calexico, for transportation and shipment to defendant Minoprio & Co., Liverpool, England, via railroad to San Diego, and thence by water to England, 934 bales of cotton; that such shipment was delivered to and accepted by the plaintiff in due course, plaintiff expecting and agreeing to transport it to San Diego with such reasonable dispatch as its general business would permit, and intending to have it in San Diego that it might be loaded upon a boat leaving that city for Liverpool on or about the 3d day of April, 1922; that the city of Calexico and the other defendants connected therewith, purporting to act in virtue of the laws of the state of California and of the laws and ordinances of said city, levied and assessed a tax upon said shipment of cotton, and pursuant to said assessment and the law governing the same, the tax not being paid, attached said cotton and withheld possession of the same from plaintiff; that thereby plaintiff was prevented from carrying out the terms and conditions of its agreement for the transportation and delivery of said cotton. Plaintiff, disclaiming all knowledge as to the legality of said tax and as to the right of the city to retain possession of said cotton and sell the same under the levy made thereon, thereupon instituted this action, praying that the defendants city of Calexico and its officers, and the defendants Minoprio & Co. and its agent Atkinson, be required to set up their respective claims in and to said cotton, etc.

Answers by way of interpleader were filed by defendants city of Calexico and Minoprio & Co., and the case has been submitted to the court upon an agreed statement of facts. From this statement it is apparent that the only question involved is as to the right of the city of Calexico, acting under the authority granted to it by the state of California, to assess for general purposes of taxation the cotton in question; it being admitted that, if the city had the right to assess the cotton, all the steps leading up to the levying of the assessment of the cotton under the name of “unknown owners” were properly and lawfully taken, and that the valid assessment on and tax due from the owner of the cotton amounted to 91 cents per bale. Pursuant to an order of court, and that the cotton might be released for its trans-oceanie journey, a sum of money sufficient to cover the entire assessment levied against the cotton was deposited by defendant Minoprio & Co. in the registry of the court to abide the event of the judgment. It is stipulated, also, that if the assessment be a legal one, certain detailed expenses incurred in the making of the levy and attachment are properly chargeable against the cotton. All of the cotton taken and seized by the city was in fact owned by the defendant Minoprio & Co. Having entered its claim to the same, it will be hereafter referred to as the claimant. There were 9 separate lots of cotton involved, each of which, in so far as its legal status was concerned, differed somewhat from the others. In order that the respective contentions advanced may be understood, it will be necessary to indicate the precise differences.

All of the cotton was produced, ginned, and baled in, Lower California, in the republic of Mexico. The baling consisted in pressing the cotton into bales of approximately 500 pounds each. They were about 3 by 4 by 5 feet in size, and surrounded and covered on the narrow sides and partially on the other side by cotton bagging, a very coarse and heavy cloth. The whole was held and maintained in the baled condition by four or five steel hoops, known as cotton ties, about one inch wide and the thickness of sheét iron, and being fastened -by a sort of buckle. Every bale was marked or stenciled with the owner’s initials and the number of the bale. With one exception (lot 6), all of the lots involved herein were either produced, ginned, and baled by claimant, and thereafter by claimant imported from Mexico into the United States, or purchased by claimant in Mexico, from those who had produced, ginned, and baled' it, and thereafter, by claimant imported into the United States. By such importing is meant that, en route to Calexico, it was hauled across the international boundary line between Mexicali and Calexico and “entered at the United States customs house at Calexico.” At the time of importation, there was no tariff on cotton imposed by the United States government, and in consequence no import duty thereon was paid.

With respect to lot 1, after importation, claimant had samé hauled to its private cotton yard and warehouse, located in the city "of Calexico, county of Imperial, state of California, where it remained untouched and unchanged in any way» until after the first Monday in March, 1922, the date fixed by the laws of the state of California for the assessing of property-in said state, the same being March 6, 1922; that said cotton was not offered for sale, nor pledged nor mortgaged to any one and not mixed with any other cotton but held and stored by itself.

The status of lot 2 was similar- to that of lot 1, save that it was “offered for sale to the general public immediately upon its receipt” in claimant’s cotton yard, and “continued to be offered for sale until after the said, first Monday in March, 1922.” In being offered for sale, it is usual and customary for cotton buyers to inspect said cotton and take samples thereof. The sampling is done as follows: The cotton bagging with which the baled cotton is covered, is slashed or cut practically across one whole-side of a bale, said slash being approximately 2 or 2% feet long, and allowing said bagging to flap open and the lint cotton to flare apart between, the cotton ties of the hoops. The buyer then reaches in and pulls out samples of lint cotton ranging in weight from one-fourth to three-fourths of a pound. Some of the bales in this lot were sampled as many as six or eight times during the period in question. Said cotton was not sold during said period by claimant, but “was mortgaged and pledged by chattel mortgage to the First National Bank of Calexico for moneys advanced by it to claimant after said cotton was imported into the United States, and before March 6, 1922.”

The status of lot 3 is similar to the above, save that, after being imported as hereinabove indicated, claimant had this lot hauled and delivered to the cotton yard and: warehouse of the Calexico Compress Company, located in Calexico, for the purpose of storage until the time came for its-compression and shipment and there it remained in its baled state until after March 6. Upon delivery of this lot to the compress company, the company issued and delivered its warehouse receipt to claimant for each bale thereof. Said receipts so issued under the laws of California were and are negotiable instruments and transferable by indorsement at the will and pleasure of the holders thereof. Said warehouse receipts evidenced and represented the ownership of said cotton covered thereby, and after issuance by said compress company the ownership of the cotton could only be known and ascertained from the holders of such receipts. After the issuance and delivery of said compress receipts to claimant, the cotton covered thereby remained in the cotton yard and warehouse of the compress company until after March 6, 1922. Said lot was, however, divided up and stored in different parts of the cotton yard, and' commingled generally with other cotton in the yard belonging to divers and sundry persons; “such other cotton being composed of both cotton grown, raised, and ginned in the United States and in the republic of Mexico.” During all of this time the cotton in this lot was offered for sale to divers and sundry buyers, and samples taken therefrom as hereinabove described. None of this lot was sold by claimant, but during the period of its deposit in the compress company’s warehouse, and previous to March 6, 1922, the claimant, in the due course of business, pledged and hypothecated compress receipts covering the same to the First National Bank of Calexico as security for money advanced by said bank to claimant, indorsing compress receipts in blank and delivering them to the bank as aforesaid.

Lot 4, after having been grown, ginned, baled, and imported as above referred to, was hauled and delivered by claimant to the cotton yard and warehouse of the compress company for storage until the time came for its-'compression and shipment; warehouse receipts being issued by the company and delivered to claimant for each bale so received and stored. This cotton was never sold by claimant, nor was it or warehouse receipts covering the same pledged or hypothecated. Prior to the 6th of March, 1922, however, upon instructions from claimant, the cotton was compressed by the compress' company, and until the time of its seizure by the city held for shipment. The compressing of the cotton is a rebaling of the same cotton to facilitate its transportation over long distances. Carriers of cotton require-that all baled cotton be compressed at the nearest and most accessible-compress to the place of its receipt by such carrier. This may be done, either by the owner or shipper at his own expense, or the carrier will compress the same and charge the expense to the shipper or .owner. Compression reduces the size of the baled cotton about one-third, and is done for the purpose of saving space in freight cars, ships, etc. In the compression of cotton, the baled cotton is taken from the place where it is stored in the cotton yard and placed on the compress platform. Thére the cotton ties- or hoops are cut and the cotton bagging cover taken off. Thereupon the-bale is placed in the compress, the bagging replaced in such a way as to show the markings on the same, hydraulic pressure is then applied, and the bale reduced to about two-thirds its original size, and if still suitable for such use, the same iron bands or ties theretofore removed from the cotton bale are-again placed around it and secured as before.

Lot No. 5 consisted of cotton produced, ginned, and baled by various growers and farmers in Lower California, and thereafter purchased by claimant, and by it imported into the United States as hereinbefore set forth. Thereafter, as heretofore indicated in some other instances, it was by claimant hauled and delivered to the cotton yard and warehouse of the compress company for storage ' until the time came for compression and shipment. The usual warehouse receipts were issued on this lot, and none of this cotton was either sold or in any manner hypothecated. On the 4th of March, 1922, claimant placed shipping instructions with the compress company for this lot, and issued instructions to said company for the compression of the same, so that it might be shipped to .Liverpool, England. At the time of its seizure, this lot had already been loaded in cars for shipment. No bill of lading had been issued by the railroad company however.

Lot No. 6 possessed the same status as No. 5, save that at the .time of its seizure by the city the cars in which the same had been placed had been sealed by the railroad company and its usual uniform bill of lading-issued by said company to claimant. At the time of its seizure the car was-standing on a sidetrack in the compress yard, awaiting arrival of a locomotive to assemble the same in train for shipment to San Diego, etc.

Lot No. 7 enjoyed the same status as the two preceding lots, save that it was either in the compress or on the platform thereof, and not yet loaded upon cars at the time of its seizure.

Lot No. 8 is essentially different from the other lots, in that it was grown, ginned, and baled in the republic of Mexico by unknown owners, and it had by them been imported into the United States previous to March 6, 1922, and had been previous to that time sold by them to claimant herein. It had not yet been compressed, but still remained in the original unbroken packages, with the usual stamps and identification marks of the gin thereon.

Lot No. 9 was grown and produced by various unknown growers and. farmers in the republic of Mexico, and being ginned and baled by them at Mexicali, in Mexico, was there purchased by the claimant from such growers. After the purchase it was imported into the United States in the manner heretofore indicated, save that, in addition, at the time of its exportation from the republic of Mexico to the United States, although no import duty was collected by the United States as heretofore indicated, yet an export duty was collecte'd by and paid to the republic of Mexico, pursuant to the laws of that republic, in the amount of $5 per bale. After its importation, it was delivered to the cotton yard and warehouse of the compress company for purposes of storage until the time for its compression and shipment, and it there remained in its baled state until after March 6, 1922. Upon its delivery to the compress company, the usual warehouse receipts were issued to the claimant for each bale thereof, and the cotton was from time to time offered for sale to sundry buyers; samples being taken as heretofore indicated with respect to other- lots. This lot of cotton was never sold by claimant. Subsequent to the deposit with the compress company, and previous to the first Monday in March, 1922, claimant in due course of business pledged and hypothecated the compress receipts covering said cotton with the First National Bank of Calexico as security for moneys advanced to it.