of fact, the defect in the removal proceedings. The actual entry of a general appearance by the plaintiff, or proceedings by it or its attorneys, in open court, prior to the filing of the petition to remand, if such had been proved, would probably have taken effect as a waiver by force of law. But, in the absence of sufficient proof of the matters herein before stated, I am of the opinion that the inchoate and executory transactions referred to do not have any such effect.

As the matter now stands, the plaintiff is entitled to its costs in this court. Martin v. Snyder, 148 U. S. 663, 664, 13 Sup. Ct. 706. Therefore the clerk will enter the following order: Ordered, that the findings of the court accompanying this order be filed and entered of record, and that an order be entered remanding the case, with costs for the plaintiff.

DE BEAUMONT v. WEBSTER.

(Circuit Court, D. New Jersey. January 2, 1896.)

WITNESS-COMPETENCY-INTErested Party-Rev. ST. § 858.

Rev. St. 858, contains the whole law governing the courts of the United States in respect to the competency, as witnesses, of interested parties, and no state statute can annex any further qualification to its provisions. Accordingly, held, that an interested party could not be wholly excluded as a witness in an action brought in a federal court by an administratrix, but only such parts of his testimony could be rejected as related to transactions with, or statements by, the intestate.

This was a suit brought by Alexandre De Beaumont, and continued after his death by his administratrix, against Warren Webster, for an accounting. The cause was heard on the pleadings and proofs, and at the same time a motion was made to strike out certain testimony of Warren Webster.

Carrie B. Kilgore and David C. Harrington, for complainant.
E. Cooper Shapley and Ernest Howard Hunter, for defendant.

DALLAS, Circuit Judge. Immediately before the argument of this case was entered upon, complainant's counsel presented a motion in writing to strike out the testimony of Warren Webster, on the ground that his examination as a witness on his own behalf occurred after the death of Alexandre De Beaumont, and the substitution of his administratrix as a party plaintiff. This motion has been re tained by me, and will now be filed as of December 5, 1895,-the day upon which it was made.

By section 858 of the Revised Statutes of the United States, it is enacted that no witness shall be excluded be cause he is a party to or interested in the issue tried:" provided (so far as affects the present case) "that in actions by

administrators neither party shall be allowed to testify against the other, as to any transaction with, or statement by, the intestate." This section is the whole law of the matter, and no state statute can, for this court, annex any qualification to the general

competence created by its first clause. Its own proviso prescribes its only limitation, and that proviso, as has been seen, is not that an interested party may not, as against an administrator, testify to anything, but that he shall not be allowed to testify "as to any transac tion with, or statement by, the intestate." He is expressly made competent, and it is only as to the matters specified that his testimony is to be excluded. Therefore, as the evidence given by Warren Webster is not confined to transactions with, or statements by, De Beaumont, but extends to and includes other material matters, this motion to strike out all his testimony, "as he was not a competent witness," is erroneously conceived. It proposes too much, and conse quently cannot be allowed. Potter v. Bank, 102 U. S. 163; Goodwin v. Fox, 129 U. S. 630, 9 Sup. Ct. 367. The only objection that was made during Webster's examination was "to any testimony on the part of the witness as to conversations with Mr. De Beaumont"; and this objection (without pausing to inquire whether, in view of the alleged assignment by De Beaumont to his wife, it could, if important, be sustained) I have assumed to be a valid one, and accordingly have excluded from consideration all testimony to which it is applicable. To more than this the complainant is, in my opinion, certainly not entitled.

The object of this suit is to compel an accounting by the defendant under an agreement in writing, dated March 21, 1887, between Warren Webster and Elwood S. Webster and Alexandre De Beaumont, by which it was agreed that the business to which it relates should be managed by the said Warren Webster and by said Elwood S. Webster (since deceased) for the joint benefit of the parties. That prior to April, 1888, some business was done in pursuance of this contract, is admitted; but that such business resulted in considerable loss and that nothing is due from the defendant with respect to it, has been conclusively shown, and seems not to be denied. The only substantial question, and the one to which the arguments of counsel have been directed, is as to whether the contract continued in force, and business was transacted under it, after April, 1888. Mr. Thomas B. Harned, as "Atty. of Mr. and Mrs. De Beaumont," on April 19, 1888, sent to Webster Bros. a communication in writing, which Warren Webster understood to import that they meant to cancel the agreement; and, upon Mr. Harned's subsequently expressly informing him that such was its meaning, Mr. Webster accepted and agreed to it. Some question has been made as to Mr. Harned's authority to represent Mr. and Mrs. De Beaumont in the matter, but in my judgment the proofs leave no room for doubt about it; and the subsequent conduct of both Mr. and Mrs. De Beaumont is inexplicable, except upon the assumption that they knew and acquiesced in what Mr. Harned had done, and fully understood that the contract had come to an end. It would not be possible, within reasonable compass, to refer in detail to all the evidence upon this subject, and therefore I content myself with this statement of what I find to be its effect, but may mention, generally, that Mr. De Beaumont's sickness would not satisfactorily account for his withdrawal from all participation in a business in which he believed himself to

be still interested, and to which he had agreed to contribute his personal services; and the long delay which occurred in asserting the continuing subsistence of the contract, especially when considered in connection with the several acts of Mr. and Mrs. De Beaumont in disavowal of it, is quite convincing that they supposed it to have been effectually terminated.

Whether the defendant has, irrespective of this contract, violated any right of the plaintiff or of her intestate, need not be considered. If he has, redress must be sought otherwise than by this suit. All that is now decided is that the accounting demanded cannot be decreed, because the instrument upon which the alleged right to an account is founded had ceased to be operative at the date from which any account, if demandable, would be requisite. Bill dismissed, with costs.

LAWRENCE v. UNITED STATES.

(Circuit Court, D. South Carolina. January 2, 1896.)

1. SUBROGATION.

A contract for the construction of a United States courthouse provided that the government might withhold any part of the sums to be paid the contractor, in case of the latter's failure to promptly pay laborers and material men. A bank, from time to time, lent money to the contractor, with the expectation that it would be used in carrying out his contract, but without any obligation to that effect, and some of it was used by him for paying laborers and material men. Held, that as the laborers and material men had no enforceable rights against the government, and the payment by the bank of the money used to pay their claims was purely voluntary, there was no room for the application of the principle of subrogation in the bank's favor.

2. SAME-BENEFICIAL EXPENDITURES.

Nor was the equitable principle allowing to a bona fide holder compensation for beneficial expenditures applicable in favor of the bank, since the money paid by it was not used in removing an incumbrance resting on a title, or in paying debts having behind them a quasi lien or a trust. 3. BUILDING CONTRACT-RIGHT TO WITHHOLD FUNDS.

The government being given the right to withhold part of the fund only in case of the nonpayment of laborers or material men, the bank could not ask that this right be exercised in its favor, as the representative of claims of the laborers and material men which had been paid. 4. SAME.

In such case, since the laborers and material men had no right to the fund withheld by the government, which belonged wholly to the contractor, the bank could not acquire any rights in such fund as the representative of such laborers and material men.

5. PAYMENT.

A note is not payment of an account, unless it be expressly accepted as payment, or produce payment.

6. SAME.

Where one to whom a draft is given for payment of an account accepts it and sells it to another, without assuming any guaranty or personal liability, neither of them can make any claim under the original account. 7. COUNSEL FEES-PAYMENT OUT OF GENERAL FUND.

Where a contract with the United States authorized the latter to withhold payment of part of the contract price in case of failure to promptly pay laborers or material men, no one but the contractor could bring pro

ceedings for the distribution of a fund so withheld; and hence his counsel, bringing such proceedings, are entitled to compensation out of such fund.

Cothran, Wells, Ansel & Cothran, for plaintiff.

Julius H. Heyward, Haynsworth & Parker, and I. C. Jeffries, for petitioner.

SIMONTON, Circuit Judge. This case now comes up upon the report of the special master under the order of 26th September last. A recapitulation of some of the facts of the case is necessary. The government concluded a contract with James R. Lawrence for building a courthouse and post office in Greenville at and for the sum of $76,290. The building has been completed and accepted. Payments were made to Lawrence from time to time as the work progressed; in all, $67,999.01. There has been withheld by the government, from the contract price, the sum of $7,601.06. This was done under a clause in the contract which gives to the United States the right and privilege of withholding any portion of the. sum of money to be paid to Lawrence under the provisions of the contract, in the event of the failure of Lawrence to promptly make payment to all persons who may supply him with labor and materials in the prosecution and completion of the work therein pro-, vided for. The reason assigned by the government for withholding this sum was the number of claims against him, which had been filed in the department, for labor and materials supplied in connection with his contract for said building. In the present action the government admits that this sum has been withheld, but it exercises this right and privilege secured under the contract, and insists that the money thus withheld be paid to such persons as come within this favored class. The Greenville Savings Bank, at Lawrence's request, made an arrangement with him under which it lent him moneys, from time to time, secured by the hypothecation of his claim against the government for work done and to be done under his contract. There is some confusion in the testimony, but the preponderance of the evidence is that Lawrence intended, and the bank knew his intent, to use the money thus lent to him in the performance of his contract. As each check came to Lawrence in the payment of the work as it progressed, it was delivered to the bank, and he indorsed it, and then the proceeds were put to his credit on general account. He made no special account for this purpose. There is no evidence that the bank bound itself absolutely to furnish to Lawrence all the money needed for this purpose, or that the bank could not discontinue its loans whenever it pleased. The bank paid no money to any laborer or material man. All the money was paid to Lawrence, to be used by him; he stating that he wanted it for his contract, but being under no obligation or contract so to apply it. In prior proceedings in this cause the bank claimed the entire sum withheld by the government, insisting that it was covered by this hypothecation. This claim has been disallowed. But the special master was instructed to take such testimony as bore upon the

question, "Has the bank any right to be subrogated to a claim, pro rata, on this fund, for so much of the money it advanced as was used for pay of laborers or material men?" He has made his report, showing how much of this money was used for this purpose. How does this affect the claim of the bank to any part of the fund? The term "subrogation," used by the court in its order, was not happily chosen. "Subrogation" involves the idea of a right existing in one, with which another, under certain circumstances, is clothed, -a right capable of enforcement. A surety pays the debt of his principal. He is subrogated to all the rights of the creditor, and is entitled to the protection of all the collaterals held by him,— rights which he can enforce. But these laborers and material men have no rights, as against the government,-rights which can be enforced. There is no privity between them and the government. They are recipients of its bounty, debtors to its good will, objects of its provident care, in whose favor, suo motu, it exercises its right and privilege to withhold the money until their claims are satisfied. Nor have they any specific interest in the money so withheld. It is not necessarily applicable to their claims. Lawrence could satisfy them in any way, and, upon evidence that their claims were arranged, he could get the money which had been withheld. So "subrogation" is not the term to be applied to this transaction. If 'subrogation existed at all, it must be as to the rights of the laborers and material men to whom Lawrence paid the money the bank lent to him. As has been seen, they had no rights. To give existence to this equity of subrogation, it was necessary not only that the bank, in some way or other, was bound for the amount due to them or interested in its payment, and that it was not at liberty to make this payment or not, at its election. Insurance Co. v. Middleport, 124 U. S. 534, 8 Sup. Ct. 625; Brown v. Gadsden, Speer, Eq. 37. It must also appear that at the time of the payment the laborers and material men were invested with rights to which the bank succeeded, and which it could enforce. The supreme court of the United States, in Insurance Co. v. Middleport, 124 U. S., at page 548, 8 Sup. Ct. 625, quotes with approval Sheldon on Subrogation, as follows:

"The doctrine is derived from the civil law, and it is said to be a legal fiction, by force of which an obligation extinguished by a payment made by a third person is treated as still subsisting for the benefit of this third person, so that by means of it one creditor is substituted to the rights, remedies, and securities of another. It takes place for the benefit of a person who, being himself a creditor, pays another creditor, whose debt is preferred to his by reason of privileges or mortgages; being obliged to make the payment, either as standing in the situation of a surety, or that he may remove a prior incumbrance on the property on which he relies to secure his payment. Subrogation, as a matter of right, independently of a judgment, takes place only for the benefit of insurers, or of one who, being himself a creditor, has satisfied the lien of a prior creditor, or of a co-obligor or surety who has paid the debt which ought, in whole or in part, to have been met by another. The doctrine is not applied for the mere stranger or volunteer who has paid the debt of another without any assignment or agreement for subrogation, without being under any legal obligation to make the payment, and without being compelled to do so for the preservation of any rights or property of his own."