never, before telling her of the transfer, had any conversation with her about it. At first she declined to answer whether she had any property in Hamilton county, Tenn., but afterwards admitted that she had not. Said that she did own property somewhere. She thought that that property was in her own name, but did not know whether it was or not. It was not in the state of Tennessee, and she owned no property in that state. T. G. Montague was not a witness. James E. Brading, who was cashier of the Johnson City Bank, was called as a witness for defendant. He'testified that on the 27th of April, 1894, R. S. Boyd, who was understood to be insolvent, but nevertheless was said to have good credit in the Jonesborough Bank, offered 50 cents on the dollar in cash for $1,000 of T. G. Montague's stock in the Johnson City Bank, with the understanding that $2,000 or $3,000 more could probably be handled at the same figure, and possibly the entire $6,000. This offer was communicated in writing to Montague, and by him declined.

Brading testifies that he thinks he communicated by writing Boyd's offer on the 27th of April, the date that it was made. It does not appear to have reached Montague before his letter of the following day, directing the issue of certificates to his sister, had been posted; nor does it appear that Montague gave any reason for declining to accept the offer excepting that which he avers in his answer, which was not called for under oath, but was sworn to. It appears also by the testimony of Brading that at the date of the transfer by Montague of his stock to his sister the general estimate at Johnson City of the value of the stock was from 50 to 75 cents.

Robert Pritchard, for appellant.

Thomas McDermott, for appellee.

Before TAFT and LURTON, Circuit Judges, and SAGE, District Judge.

SAGE, District Judge, after stating the facts as above, delivered the opinion of the court.

Montague's letters and telegrams to the Johnson City Bank make it evident that he knew months before he made the transfer of his stock to his sister that the bank was in imminent danger of insolvency. That transfer was not only without consideration, but, at the time, without even the knowledge of his sister. It was made on the 28th of April, 1894. She testified that, according to her recollection, she was informed of it in May or June, 1894, but added that it might have been in April. Her testimony as to her financial condition is altogether unsatisfactory. Her unwillingness at first to give any testimony on the subject was enough to warrant the most unfavorable inferences. At last she admitted that she had no property in Tennessee. Said that she did own some property somewhere, which she thought was in her own name, but did not know whether it was or not. That she did not take sufficient interest in the case to make any answer, and that she suffered decree against her by default, strongly indicates that she was utterly irresponsible financially, or that she had herself no faith in the integrity of the transaction. She was not even a witness of her own volition, or upon the call of the defendant, but was subpoenaed and examined on behalf of the complainant. Montague himself was not a witness in the case,-a circumstance which, in view of the evidence against him, is of great weight. A like circumstance in Bowden v. Johnson, 107 U. S. 251, 2 Sup. Ct. 246, cited låter in this opinion, was so characterized by the supreme

court. In his answer Montague set up that a few days prior to the transfer of his stock he was offered by a responsible party in Johnson City 50 cents on the dollar for a portion thereof, with the assurance that a great part, if not all, of the residue would be taken at the same price. That averment undoubtedly relates to the offer above referred to, for it does not appear that any other was made. It does not appear from the evidence that the person who made the offer was insolvent, although one person is said to have declared that he had good credit in the Jonesborough Bank. The offer was for $1,000 of the stock at 50 cents on the dollar. It was not made until the 27th of April. Montague's letter inclosing to the bank the certificates for his shares with an order for their transfer to his sister was dated and mailed the next day, April 28, 1894, at which time the offer to him could not have been received. That fact alone is sufficient explanation of his declination. It may have been also that, while he had abundant reason to apprehend the failure of the bank, he still hoped that it would pull through, in which event the stock could be transferred to him by his sister. If there were any doubt as to the motive which induced him to make the transfer, it would be removed by his letter under date of November 8, 1894, to the bank examiner, who had on the previous day written him a confidential letter inquiring concerning the president of the Johnson City Bank, and asking for the name of some thoroughly reliable and well-posted person at or near Johnson City to consult "on credits," etc. The learned judge who heard the case below was of opinion that this letter could not be properly used against the defendant, because it was a confidential letter, and voluntarily turned over by the bank examiner to the receiver. We do not concur in that view. The letter was in no sense a privileged communication, and the mere fact that it was in answer to a letter marked "Confidential" cannot, in our opinion, be regarded as a legal objection to its use as testimony. The authorities are the other way. In Wilson v. Rastall, 4 Term. R. 753, Lord Kenyon said:

"But if a friend could not reveal what was imparted to him in confidence, what is to become of many cases even affecting life, e. g., Doctor Ratcliff's Case, 9 State Tr. 582. And if the privilege now claimed extended to all cases and persons, Lord W. Russell died by the hands of an assassin, and not by the hands of the law, for his friend, Lord Howard, was permitted to give evidence of confidential conversations between them." 3 State Tr. 715.

In the same case, Buller, J., said that it was indeed hard in many cases to compel a friend to disclose a confidential conversation, but that the privilege must be confined to the cases to which it extends. In Loyd v. Freshfield, 2 Car. & P. 329, it was held that a banker is bound to disclose a communication, however confidential.

The letter to Montague was written by Miller in his official capacity, and signed by him as examiner. Montague's answer is addressed to the examiner in his official capacity. It may well be doubted whether such letter, whatever may have been the intention of the writer, can be regarded as confidential in the sense in which the court below regarded it, and in the sense which counsel for ap

pellee seek to apply here. Besides, the information called for by the examiner was with reference to the president of the Johnson City Bank. Montague's answer volunteered, in addition, among other things, this very significant statement respecting the Johnson City Bank: "I became alarmed after seeing several of his reports as made to the comptroller, showing his cash often below the required reserve, and disposed of my stock some time ago." We know of no reason founded upon any principle of the law of evidence why this statement, which is a distinct and unequivocal admission of a fact, should be excluded. It tells the reason for the transfer of the stock in plain, direct words, which cannot be mistaken. This statement, taken in connection with the letters first above referred to, the testimony of Clara W. Montague, and the omission of defendant, Montague, to testify as a witness for himself in answer to the evidence against him, brings the case clearly within the rule stated in Bowden v. Johnson, 107 U. S. 261, 2 Sup. Ct. 254, that:

"Where the transferror, possessed of information showing that there is good ground to apprehend the failure of the bank, colludes and combines, as in this case, with an irresponsible transferee, with the design of substituting the latter in his place, and of thus leaving no one with any ability to respond for the individual liability imposed by the statute, in respect of the shares of stock transferred, the transaction will be decreed to be a fraud on the creditors, and he will be held to the same liability to the creditors as before the transfer. He will be still regarded as a shareholder quoad the creditors, although he may be able to show that there was a full or a partial consideration for the transfer as between him and the transferee."

The rule does not require proof that the transferror had actual 'knowledge of the insolvency of the bank, and that the transfer was made with a purpose to avoid individual liability. It is enough if the transferror had "good ground to apprehend the failure of the bank," and made the transfer to an irresponsible person, with intent to relieve himself from individual liability. Proof of actual knowledge of the insolvency of the bank was not made in Stuart v. Hayden, 18 C. C. A. 618, 72 Fed. 402, but the court of appeals of the Eighth circuit held the transferror liable. In Foster v. Lincoln, 74 Fed. 382, the defendant was president of the National Bank of Lyndon, Vt., and held 25 shares of stock in the First National Bank of Deming, N. M., which telegraphed to the Lyndon Bank, also a stockholder, for $5,000, to be sent by telegraph, for its aid. Within a week afterwards defendant made a voluntary transfer of his stock to his children, all of whom were financially irresponsible. The facts above stated were put in evidence, and it was shown, in addition, that the telegram for aid, when it was received, came to the knowledge of the defendant, who was sued to enforce his individual liability as a stockholder. That was all the evidence against him. The court regarded the telegram, which was received and came to defendant's knowledge six days before the transfer of his stock, as sufficient warning to him of the straits of the bank, and entered decree for the complainant. That case was not so strong for the complainant as is this case. There the defendant was a witness. Here the defendant was silent, and, al

78 F.-54

though the transfer was voluntary, and made to his own sister, without her knowledge, she being financially irresponsible, and so little interested in the result as to make no defense, he declined to be a witness, made no explanation, and rested solely upon the contention that the complainant had not succeeded in making specific proof of the insolvency of the bank at the date of the transfer of the stock; and that, if the bank was then insolvent, it was not proven that he knew it or had notice of any other facts from which such knowledge could be inferred. That the contention is not well founded is apparent from what has been already expressed in this opinion. The appellant is entitled to decree as prayed in the bill. The decree below will be reversed, with instructions to enter a decree in accordance with this opinion.

TOWNSEND et al. v. P. J. WILLIS & BRO. et al.

(Circuit Court of Appeals, Fifth Circuit. February 2, 1897.)

No. 456.

ADMINISTRATOR OF COMMUNITY PROPERTY-APPROVAL OF BOND-COLLATERAL ATTACK. The statutes of Texas provide (Rev. St. 1895, art. 2222 et seq.) that a husband who survives his wife, in order to be appointed administrator of and authorized to sell the community property, must give a bond conditioned for faithful administration of such property and payment of one-half to the persons entitled, which bond shall be approved by the county judge, whose order of approval shall be recorded in the minutes of the court which has general jurisdiction in probate matters. Held, that an order so made is in effect a judgment of the court, and is not void or open to attack in a collateral proceeding, although the bond accepted and approved by it does not conform to the statutory requirements. Appeal from the Circuit Court of the United States for the Northern District of Texas.

This suit was originally begun in the district court of Erath county by appellants, all of whom are citizens of the state of Texas, against P. J. Willis & Bro., a corporation duly incorporated under the laws of the state of West Virginia, and F. C. Oldham, a citizen of Texas. On the application of P. J. Willis & Bro., the cause was removed to the United States circuit for the Northern district of Texas, and there, on motion, the court ordered that the pleading should be recast so as to conform to the rules of equity practice, whereupon appellants filed their amended bill, therein alleging that they inherited from their mother an undivided half interest in the lands described in said bill; that their father, F. C. Oldham, after the death of their said mother, undertook to qualify, under the laws of Texas, as survivor of the community, and thereafter conveyed the lands in question to P. J. Willis & Bro., in settlement of indebtedness, all of which accrued, as appellants claim, after the death of their said mother; that the attempted qualification of F. C. Oldham, as survivor, was absolutely void and of no effect whatever; specifically charging as follows:

"And plaintiffs allege: That thereafter, on the 21st day of April, 1890, F. C. Oldham filed in the probate court of Erath county, Texas, an application for appointment as community administrator of the community estate of himself and his deceased wife, M. V. Oldham, which was by said court on said day allowed, and appraisers appointed to inventory and appraise said estate, which inventory and appraisement was returned into said court on April 15, 1890; and thereupon the said F. C. Oldham, being required to enter into a bond as such administrator in the sum of twentyseven thousand four hundred and eighty dollars, conditioned as the law required, executed and filed with said court a certain pretended bond; and thereupon said court indorsed the same as being filed and approved, and made and had entered on the rec

ord minutes of said court a certain order as judgment approving said bond, and apthorized him to have, dispose of, and sell all the community property of said estate, as shown in said inventory, and which embraced the property herein before described. That said bonds and said indorsements and judgment were and are substantially as follows, to wit:

"No. 113. Bond filed May 13th, 1890.

""The State of Texas, County of Erath. Know all men by these presents, that we, F. C. Oldham, as principal, and H. A. Smith and A. A. Chapman, as sureties, are held and firmly bound unto the county judge of the county of Erath and state of Texas, and his successors in office, in the sum of twenty-seven thousand four hundred and eighty and 00-100 dollars, conditioned that the above-bound F. C. Oldham, who has been appointed by the county judge of Erath county administrator of the estate of M. V. Oldham, deceased, shall well and truly perform all the duties required of him under said appointment.

66

[Signed]

"No. 113. Decree.

F. C. Oldham. "'H. A. Smith. "A. A. Chapman.

""The State of Texas, County of Erath. On this 13th day of May, A. D. 1890, came to be heard the inventory, appraisement, and bond of the survivor of the estate of F. C. Oldham and his deceased wife, M. V. Oldham, the same having been duly considered by the court; and it appearing to the court that said appraisement is fair, just, and reasonable, and a fair valuation placed thereon, and that said bond is sufficient, it is therefore considered, ordered, adjudged, and decreed by the court that said appraisement and bond be, and the same is hereby, in all things approved, and that F. C. Oldham, survivor, be, and he is hereby, authorized to manage, control, and dispose of said community property above inventoried.'

"And which said bond and the order and judgment so rendered and entered was and is erroneous, unauthorized, and unlawful, in this, to wit: (1) Said bond was and is unlawful and void as a bond to protect these plaintiffs, as heirs of M. V. Oldham, because the same shows on its face to be a bond by F. C. Oldham, as the regular administrator of the estate of M. V. Oldham, and not a bond of F. C. Oldham, as community administrator of the community estate of himself and his deceased wife, M. V. Oldham, and there being nothing in said bond or any reference therein to any other writing describing the particular estate that the sureties thereon were liable as such sureties, and nothing in said bond or reference to any writing therein defining and describing the subject-matter of the undertaking-of said sureties, and that said bond on its face showing no undertaking on the part of said sureties to be liable in any other way except as shown in said bond, and that said bond is insufficient and incompetent to bind said sureties as sureties for said F. C. Oldham as the community administrator of the community estate of himself and his deceased wife, M. V. Oldham. (2) Said bond was and is erroneous, unlawful, and void, and wholly contrary to law, and insufficient and incompetent as a bond to secure and protect the heirs of M. V. Oldham in their interest in said estate, in this: that said bond is only conditioned that said F. C. Oldham shall well and truly perform all the duties of administrator of the estate of M. V. Oldham, and which is the only condition therein, and is not conditioned, as provided by law in cases of community administration, that said F. C. Oldham will faithfully administer the community estate of himself and his deceased wife, M. V. Oldham, and pay over one-half the surplus thereof, after the payment of the debts with which the whole of said property is properly chargeable, to such person or persons as shall be entitled to receive the same; and therefore said bond is irregular, erroneous, and void, and said sureties were not and are not bound thereby to protect and secure the heirs of M. V. Oldham their interest in said property. And (3) because the facts above set forth as to the irregularity, incompetency, and insufficiency of said bond, and because no bond, in fact, was ever made and delivered to said court provided and conditioned as the law requires, by F. C. Oldham, to entitle him to be appointed and authorized to act as the surviving administrator of the community estate of himself and his deceased wife, M. V. Oldham. The action of the court in approving said bond, and the order and judgment thereon made by said court approving the same, and authorizing said Oldham to act as such administrator, and to sell, control, and dispose of said property, was irregular, erroneous, and unlawful, without authority in the court so to