(289 F.)

formance may not be required, when the party seeking it cannot deliver.

[1] (a) Articles 7796, 7797, and 7807, Vernon's Sayles' Texas Civil Statutes, volume 4, declare unlawful such combinations and agreements and understandings as prevent or diminish or tend to restrain competition. These provisions read as follows:

Article 7796. "Trust" Defined.-"A trust' is a combination of capital. skill or acts by two or more persons, firms, corporations or associations of persons, or either two or more of them for either, any or all of the following purposes:

"1. To create, or which may tend to create, or carry out restrictions in trade or commerce, or aids to commerce or in the preparation of any product for market or transportation, or to create or carry out restrictions in the free pursuit of any business authorized or permitted by the laws of this state.

"2. To fix, maintain, increase or reduce the price of merchandise, produce or commodities, or the cost of insurance, or of the preparation of any product for market or transportation.

"3. To prevent or lessen competition in the manufacture, making, transportation, sale or purchase of merchandise, produce or commodities, or the business of insurance, or to prevent or lessen competition in aids to commerce, or in the preparation of any product for market or ransportation.

"4. To fix or maintain any standard or figure whereby the price of any article or commodity of merchandise, produce or commerce, or the cost of transportation, or insurance, or the preparation of any product for market or transportation, shall be in any manner affected, controlled or established. "5. To make, enter into, maintain, execute or carry out any contract, obligation or agreement by which the parties thereto bind, or have bound, themselves not to sell, dispose of, transport or to prepare for market or transportation any article or commodity, or to make any contract of insurance at a price below a common standard or figure, or by which they shall agree in any manner to keep the price of such article or commodity or charge for transportation or insurance, or the cost of the preparation of any product for market or transportation, at a fixed or graded figure, or by which they shall in any manner affect or maintain the price of any commodity or article or the cost of transportation or insurance, or the cost of the preparation of any product for market or transportation between them or themselves and others, to preclude a free and unrestricted competition among themselves or others in the sale or transportation of any such article or commodity, or business or transportation or insurance, or the preparation of any product for market or transportation, or by which they shall agree to pool, combine or unite any interest they may have in connection with the sale or purchase of any article or commodity, or charge for transportation or insurance or charge for the preparation of any product for market or transportation, whereby its price or such charge might be in any manner affected.

"6. To regulate, fix or limit the output of any article or commodity which may be manufactured, mined, produced or sold, or the amount of insurance which may be undertaken, or the amount of work that may be done in the preparation of any product for market or transportation.

7. To abstain from engaging in or continuing business, or from the purchase or sale of merchandise, produce or commodities partially or entirely within the state of Texas, or any portion thereof."

Article 7797. "Monopoly' Defined.-A monopoly is a combination or consolidation of two or more corporations when effected in either of the following methods:

"1. When the direction of the affairs of two or more corporations is in any manner brought under the same management or control for the purpose of producing, or where such common management or control tends to create a trust as defined in the first article of this chapter.

"2. Where any corporation acquires the shares or certificates of stock or

bonds, franchise, or other rights, or the physical properties, or any part thereof, of any other corporation or corporations, for the purpose of preventing or lessening, or where the effect of such acquisition tends to affect or lessen competition, whether such acquisition is accomplished directly or through the instrumentality of trustees or otherwise."

Article 7807. "All Agreements in Violation of, Void.-Any contract or agreement in violation of the provisions of this chapter shall be absolutely void and not enforceable either in law or equity."

The decisions of the courts of Texas construe liberally these antitrust regulations. If the understanding between the plaintiff and the defendant would result in a diminution of competition, then and in that event the agreement upon which this action is based, and for the performance of which the plaintiff prays, would be illegal and against public policy.

[2, 3] Where the interests of the parties alone are concerned, a court of equity will not decree specific performance of a contract which is illegal, and for that reason void at law. 25 R. C. L. 210; St. Louis v. Mathers, 71 Ill. 592, 22 Am. Rep. 122; Swint v. Carr, 76 Ga. 322, 2 Am. St. Rep. 44.

"An express statutory restriction will not be ignored by the courts, but will be indorsed by the refusal of chancery, to decree specific performance of contracts made contrary to the statute."

Where, for instance, a federal statute prohibits a combination amounting to monopoly of trade or commerce among the several states, equity will not enforce performance of a contract to effect such combination. United Shoe Machinery Co. v. La Chapelle, 212 Mass. 467, 99 N. E. 289, Ann. Cas. 1913D, 715. The authorities present, however, a different rule when the public interest is involved, and hold that chancery may enforce an illegal contract as long as such interest requires the enforcement of such a contract. Seattle Electric Co. v. Snoqualmie Falls Power Co., 40 Wash. 380, 82 Pac. 713, 1 L. R. A. (N. S.) 1032. The public is not so concerned in this litigation as to require the court to consider this exception. Therefore the general rule will be followed, and no performance required.

[4, 5] (b) A decree for specific performance is not a matter of right, but rests in the sound discretion of the court. This discretion is not arbitrary nor capricious, but is judicial, and is controlled by the estab lished doctrines and settled principles of equity. 25 R. C. L. 214–216; Alexander v. Hamilton (C. C. A.) 287 Fed. 510. When a chancellor conceives that the basic contract was vicious, meaning by the word "vicious" in contravention of the trust laws of the place of performance, and when it appears that the party seeking performance cannot specifically deliver, then and in that event the relief will be denied. The plaintiff would not be able to deliver the Chestnut lease nor the Edmondson well; these properties were valuable, integral parts of the original agreement.

(c) Because of my view with reference to the two matters above indicated, a discussion of the question of ultra vires and of the question of the legal execution, or approval, of the contract by the plaintiff and defendant corporations, there being no suggestion of ratification of the same, is made unnecessary.

An order will be drawn dismissing the bill.

(289 F.)

GIFFORD v. UNITED STATES.

(District Court, D. New Jersey. May 27, 1921.)

Army and navy 512, New, vol. 12A Key-No. Series-Evidence held not to show beneficiary in war risk insurance was changed.

Where soldier had taken out $10,000 war risk insurance, his wife being beneficiary thereof for $5,000 and his mother beneficiary for the same amount, evidence held not to show that a later instrument, in form of application for insurance, was or was intended to be a change of beneficiary, as to the wife's $5,000 part of the policy, from the wife to the mother.

In Equity. Suit by Mildred Muriel Gifford against the United States. Decree for plaintiff.

Charles C. Colgan, of Jersey City, N. J., and John Edmond Hewitt, of New York City, for plaintiff.

Elmer H. Geran, of Asbury Park, N. J., for the United States. Merritt Lane, of Newark, Ñ. J., for Anna Belle Gifford.

DAVIS, Circuit Judge. This suit was brought by the plaintiff against the United States for $5,000 insurance on the life of her husband, Roland Craig Gifford, a soldier in the United States Army. He enlisted on January 4, 1918, and on the 1st day of the following May, he made application for $10,000 insurance. In this policy, which was issued in due time, he named his wife, the plaintiff, beneficiary to the extent of $5,000, and his mother, Anna Belle Gifford, for the same amount. On July 13, 1918, he executed a paper purporting to be "an application for insurance" for $5,000, and designated his mother as beneficiary. The "application" follows:

"Treasury Department, Bureau of War Risk Insurance, Division of Military and Naval Insurance.

"Application for Insurance.

"My full name is Roland Craig Gifford. Home address: 33 Freeman Ave., East Orange, N. J. Date of Birth: April 1, 1894. Age, 24. Date of last enlistment or entry into actual service, Jan. 4, 1918.

"I hereby apply for insurance in the sum of $5,000.00, payable as provided in the Act of Congress approved October 6, 1917, to myself, during permanent disability, and from and after my death to the following persons, for the following amounts:

"[Here follow certain provisions not pertinent to this controversy.] "To whom do you wish policy sent? Name: Anna Belle Gifford, East Orange, N. J. (33 Freeman St.)

"Signed at Garden City, L. I., N. Y., on the 13th day of July, 1918.

"Roland Craig Gifford. "Organization: 361st Aero Squadron.

"L. A. De Vore, 1st Lieut. A. S. 361st Aero Squadron."

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes 289 F.-53

Accompanying the said application was the following communication from L. A. De Vore, Lieutenant of the applicant:

"Herewith insurance application, Form 2A, Pvt. Roland C. Gifford, changing beneficiary from wife, Mrs. R. C. Gifford, 5 Wilson St., Irvington, N. J., to mother, Mrs. Anna Belle Gifford, 33 Freeman Ave., East Orange, New Jersey. "L. A. De Vore, 1st Lieut. A. S."

The applicant died on October 27, 1918. A contest arose between the mother and widow of the insured over the original $5,000 allotted to the latter. It is contended that the above application is in fact, though not in form, a change of beneficiary from the wife to the mother. The Bureau of War Risk Insurance awarded the $5,000 originally allotted to the mother to her, and after hearing and considering the contentions and argument of the parties awarded the other $5,000 also to the mother.

Section 13 of the act provides, inter alia:

"That in the event of disagreement as to a claim under the contract of insurance between the bureau and any beneficiary or beneficiaries thereunder an action on the claim may be brought against the United States in the District Court of the United States in and for the district in which such beneficiaries or any one of them resides." 9 Federal Statutes Annotated (2d Ed.) p. 1305 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 514kk).

Accordingly proceedings were instituted in this court to have the plaintiff, the widow, adjudged the lawful beneficiary under the policy. The War Risk Insurance Act provides in section 402 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 514uuu) that:

"Subject to regulations, the insured shall at all times have the right to change the beneficiary or beneficiaries of such insurance without the consent of such beneficiary or beneficiaries but only within the classes herein provided.”

The regulation in effect at that time provided that:

"Every change of beneficiary shall be made in writing and shall be signed by the insured and be witnessed by at least one person. No change of beneficiary shall be valid unless and until it is recorded in the Bureau of War Risk Insurance." T. D. 25 W. R. Regulation No. 14 of March 20, 1918.

The regulations, therefore, providing for a change of beneficiary at the time of the death of the insured, were that, first, a change should be made in writing, signed by the insured, and witnessed by one person; and, second, the change must be recorded in the Bureau of War Risk Insurance. The plaintiff insists that these requirements were not complied with, and therefore no change of beneficiary without such compliance could be made. She contends that, where the insurer has made reasonable regulations defining the method by which the insured may change the beneficiary, the regulations are part of the contract and the right to change can be exercised in no other way. Metropolitan Ins. Co. v. Clanton et al., 76 N. J. Eq. 4, 73 Atl. 1052; Sullivan et al. v. Maroney et al., 77 N. J. Eq. 565, 78 Atl. 150; Sovereign Camp, Woodmen of the World, v. Israel, 117 Ark. 121, 173 S. W. 855; Supreme Lodge of Fraternal Brotherhood v. Price, 27 Cal. App. 607, 150 Pac. 803.

This is doubtless the law as applied to ordinary life insurance under normal circumstances, but more liberal rules prevail in fraternal organi

(289 F.)

zations. The rule invoked by the plaintiff that the insured must change the beneficiary in the manner pointed out by the policy and by-laws of the company is subject to three exceptions: (1) Waiver of strict compliance with the rules by the insurer; (2) if it is beyond the power of the insured to comply literally with the regulations, a court of equity will treat the change as having been legally made, when the insured has done all that he can to effect the change; (3) if the insured has done all he can to effect a change, and dies before the change is actually made, a court of equity will treat the change as having been made and the certificate issued. Supreme Council of Royal Arcanum v.. Behrend, 247 U. S. 394, 38 Sup. Ct. 522, 62 L. Ed. 1182, 1 A. L. R. 966; Supreme Conclave, Royal Adelphia, v. Cappella (C. C.) 41 Fed. 1. It is sought to bring this application within these exceptions and the regulations of the department by certain letters alleged to have been written by the insured, by the letter and deposition of Lieutenant De Vore, and by the circumstances surrounding the applicant when he sought to make the change. He wrote a letter to Miss Ethel Barnes on July 11, 1918, from Garden City, Long Island, two days before the application was made, and several letters afterward to his parents. In the letter to Miss Barnes, he said, "I am going to have both allotment and insurance all made out to mother;" but in none of the letters written after the application was made did he say or even hint to any one that he had made a change of the beneficiary.

The letter of the lieutenant was quoted in connection with the application above. His deposition was taken, and it appears from it that he does not remember individually or specifically the insured, nor does he recall what he said to him. The letter, therefore, was a conclusion drawn by the lieutenant from something that was said to him by the insured, but what it was he does not now know.

It is contended by the defendant and the mother that the insured did all that he could to effect the change of the beneficiary, but died before the change was made and the certificate issued, and therefore he comes within the above exceptions. They urged that a more liberal rule should apply to soldiers insured by the Bureau of War Risk Insurance than even in fraternal organizations, in which the beneficiary does not have a vested interest, but only an expectancy, which the insured may defeat without the consent or knowledge of the beneficiary. Supreme Council of Royal Arcanum v. Behrend, supra. Soldiers had no op⚫tion, but were compelled to take out insurance of an amount somewhere between $500 and $10,000. Being involuntary insurers, they had no power of selecting their own agents, but had to make their desires known to their superior officers.

In view of the unusual circumstances surrounding soldiers in the army and their restricted freedom of action, a liberal rule should be adopted in construing their acts in relation to their insurance. But do the facts in the present case bring it within the liberal rules contended for? An analysis of the evidence shows that the application on its face was made for additional insurance. The instrument itself, executed by the insured and witnessed in accordance with the requirements of the statute and regulations, does not contain a word or hint that it was intended to be an application for a change of beneficiary