The Canal Boat Excelsior.

other parties did not accept them, but refused to receive them, and it was agreed between the parties that every thing should remain as it was, and the engine should remain on board of the boat until the return of the claimant from Philadelphia on the 28th, but that the libellant, in violation of such agreement, commenced this suit before the return of the claimant; that the claimant is ready and willing to perform the agreement on his part; and that the other parties have failed to perform it.

I think, on the evidence, that this defence fails. It appears, that the claimant did not have the legal title to the boat so that he could convey it by a bill of sale. He had an equitable title only. The money to buy the boat for him had been advanced by a friend of his in Philadelphia, who took a bill of sale of the boat in his own name. The claimant was entitled to receive a bill of sale of the boat from his friend whenever he should reimburse the money. These facts were not disclosed when the agreement of sale was made. When the claimant was in Philadelphia with the boat, he endeavored to procure a bill of sale to himself for the boat, but his friend was too ill to transact business. The claimant had not reimbursed the money to him, nor has he yet done so fully, and he is not now entitled to demand a legal title to the boat, nor is he yet in a condition to convey one. This difficulty was disclosed by him to the other parties when he reached New York with the boat. They were not bound to pay or tender the $1,000 till they received the boat and a good title to her, and also the engine. The $1,000 was to be the consideration for the purchase of the boat and for the transportation of the engine. The engine has been transported, and is the property of the libellant. He proves that he has tendered the tollage to the proper party, and I think he is entitled to the possession of his engine free of all lien or charge for freight. He was so entitled when this suit was brought. Any freight on it is a part of the $1,000. After the claimant shall have

In the Matter of Tattnall Baily, a Bankrupt.

made proper delivery of both boat and engine, he may be entitled to the $1,000, but not till then. Meantime he has no right to withhold the engine, the tollage having been tendered.

There must be a decree for the libellant, with costs, with a reference to a commissioner to ascertain the damages sustained by the libellant.

Beebe, Donohue & Cooke, for libellant.

Benedict & Benedict, for claimant.

MAY, 1868.

IN THE MATTER OF TATTNALL BAILY, A BANKRUPT.

PLACE OF DOING BUSINESS.

Where a bankrupt did not reside in the Southern District of New York during the next six months preceding the filing of his petition, but, before his insolvency, had been in business in New York city, and had, during the whole of the said six months, carried on business in New York city as the agent and attorney of his brother, in buying and selling merchandise, keeping an office for that purpose with his brother's name upon the sign:

Held, That the petition in bankruptcy was properly filed in the Southern District of New York.

In this case the petition was filed on February 29th, 1868, and set forth that the petitioner had carried on business for six months, next immediately preceding the filing thereof, at the city of New York.

A paper was afterward filed with the register by the bankrupt's attorney, declaring that the bankrupt did not reside within the Southern District of New York during any part of the six months aforesaid; that for some time before his insolvency, he carried on business, on his own

One Vaporizer, &c.

account, in the city of New York, and from that time to the filing of his petition, and during the whole of the said six months, had been carrying on business as the agent and attorney of his brother, in buying and selling merchandise, keeping an office for that purpose in the city of New York, with his brother's name upon the sign, and well known to those who had dealings with him as so carrying on business at that office, the business having been done under a power of attorney and for a compensation of one half of the profits.

The register certified to the court the question, whether the bankrupt was carrying on business in the Southern District of New York, within said six months, giving it as his opinion that he was, and distinguishing this case from the case of Magie (ante, p. 369.)

BLATCHFORD, J. I am of opinion that the petitioner was carrying on business, for the six months next immediately preceding the filing of his petition, in the Southern District of New York, within the meaning of the eleventh section of the Bankruptcy Act.

Eastern District of New York.

MAY, 1868.

ONE VAPORIZER, &c.

DISTILLING. USING ALCOHOLIC VAPOR IN MAKING VINEGAR.

Where a manufacturer of vinegar, in good faith, used a "Foubert's Patent Vinegar Apparatus," in which a mash, fermented in the same way as for the production of whisky, was used, and, by the application of heat, alcoholic vapor was produced, which passed directly into a chamber, where it was condensed by cold water and vinegar, and the mixture, passing thence to standards, was there oxidized, and thence flowed out in the form of vinegar-alcohol, as known in commerce, being present at no stage of the process:

One Vaporizer, &c.

Held, That the manufacturer was not a distiller within the meaning of the sixteenth section of the Act of March 2d, 1867 (14 U. S. Stat., 481), and the apparatus was not liable to forfeiture for nonpayment of the special tax imposed on distillers.

That the mixture was not a "product of distillation" under the Joint Resolution of February 5th, 1864 (14 Id., p. 566.)

This was a proceeding in rem, on behalf of the United States, to enforce the forfeiture of certain property, which was, at the time of its seizure, being used by the claimant in the manufacture of vinegar. The property in question consisted of a still, or vaporizer, connected at the top with a set of ordinary vinegar standards, by means of a chamber, designated in the diagram by the letter M, constituting together an apparatus known as "A. Foubert's patent vinegar apparatus."

This apparatus, it was conceded, was used by the claimant, in good faith, for the manufacture of vinegar, and nothing else. But it was contended, on the part of the Government, that the process of making vinegar by the apparatus consisted, in part, of distilling spirit from an ordinary mash, and that, therefore, the property was liable to forfeiture, inasmuch as the claimant had never paid the special tax imposed by law on distillers.

The cause was tried before the court, without a jury, and, for the most part, upon a statement of facts agreed upon between the parties.

BENEDICT, J. This case presents an ingenious device for the evasion of the tax upon distilled spirits.

The claimant is a manufacturer of vinegar, an article produced, as is well known, by the oxidation of alcohol. The ordinary method of producing this article, when what is known as the "Quick method" is used, is to mix whisky, or some other alcoholic fluid, with a quantity of water and some strong vinegar, and then pass the mixture slowly through tubs filled with shavings saturated with vinegar, in which tubs, or standards, as they

One Vaporizer, &c.

are called, the alcohol is very thoroughly exposed to the action of the air; and the vinegar in the mixture, and in the shavings, acting as a ferment, the alcohol in the mixture is enabled to combine with the oxygen of the air, oxidation ensues, and the product flows from the standards in the form of pure vinegar. The method pursued by the claimant differs from the ordinary method in this, that instead of using whisky-an article subject to a high tax-he uses a mash, fermented in the the same manner as a mash to be used for the production of whisky, which is placed in an ordinary vaporizer, or still, and, by the application of heat, alcoholic vapor is produced from it. The still has, however, no worm or doubler connected with it; but the alcoholic vapor, when produced, passes directly from the head of the still into a chamber (M), which connects the head of the still with a set of vinegar standards. In this chamber (M), the alcoholic vapor comes in contact with a mixture of cold water and vinegar, which is flowing slowly through the chamber toward the standards; the vapor, thus passing into this cold fluid, is condensed, and there is formed a mixture of alcohol, water, and vinegar, which passing to the standards, is there fully oxidized in the manner above described, and flows out below in the form of vinegar. Thus it is seen, that while at no stage of the claimant's process is there to be found the fluid known as alcohol, or distilled spirits of commerce, the product of the whole process is vinegar made by the oxidation of alcohol. The object of the apparatus is manifestly to evade the tax imposed by law upon distilled spirits; and the question is, whether the tax can thus be evaded without a violation of the law.

To bring the claimant within the provisions of the law, he must be found to be a distiller. As a manufacturer of vinegar, he is subject to no tax; but if he be a distiller within the meaning of the Internal Revenue law, then he is subject to all the provisions of the law applicable to the makers of distilled spirits.