KNOX, District Judge.
The various claims passed upon by the special master will be disposed of in the order in which he treated them:
Claim of National Shawmut Bank of Boston:
For the reasons specified by the .master in dealing with the reclamation of Shawmut, I shall confirm the report thereon. As was said by Mr. Chief Justice Hiscock in Equitable Trust Co. v. Keene, 232 N. Y. 290, 133 N. E. 894, 19 A. L. R. 1137:
“Tbe fact that the [exchange] transaction is to be effectuated by cable is of course immaterial; the principles defining the nature of the transaction are not any different than they would be if the transaction was to be accomplished by letter or special messenger. The cable gives needed speed to the operation but does not change its nature.”
What Pacat undertook to do for Shawmut was that it would make available to the latter at a specified time and place a specified amount of foreign exchange. There was the further engagement between the parties that, upon the day the exchangé was made available to Shawmut, the consideration for the service should be paid to Pacat. In this sense, therefore, the matter was a cash transaction, and did not involve the extension of credit as between Pacat and Shawmut. Performance by one party was conditional upon performance by the other, and default by the latter would prevent title to the money or the exchange, as the case might be, from passing to him.
The nature of the transaction makes it impossible that performance by the parties should be exactly simultaneous. Not only the means of communication necessary to be employed, but differences in time between the points where the respective parties were to perform, would occasion some difference in the hour and minute of performance. But, if the law is to deal with practicalities rather than technicalities, I fail to see why the situation should be otherwise than it would have been had the transaction been consummated by special messenger, as was the case upon dissimilar facts, but upon a similar principle, in Matter of Perpall, 256 Fed. 758, 168 C. C. A. 104. Up[411]*411on the authority of, that decision, and others of a like nature, the master’s report upon the Shawmut claim will be confirmed. The claim, is also sustained upon the ground of the bankrupt’s fraud, which is the subject of discussion by the master.
Claim of Imbrie & Co. :
The facts upon which this claim is founded are substantially identical with those present in the Shawmut claim. The ruling there made will support the master’s finding, and the same is confirmed.
Claim of Isidor Stern:
The facts here bring the claim squarely within the decision of our Circuit Court of Appeals in Re Bolognesi & Co., 254 Fed. 770, 166 ,C. C. A. 216, and by reason thereof it must be disallowed, as was done by the master.
Claim of Reonard Pasqualicchio:
This claim is also within the Bolognesi Case, supra, and, were it not for the consideration of Pacat’s fraud, the law would require its disallowance. However, the date upon which the transaction was had entitles the claimant to rescission upon the ground of fraud, and for such reason the claim is allowed.
Claim of Alexander Von Fest:
This claim was allowed by the master upon the basis of Pacat’s insolvency and fraudulent intent. The master’s finding is confirmed. The present claimant, it appears, is indebted to the bankrupt estate in the sum of $3,055.13 upon an independent transaction. The trustee in bankruptcy takes the position that this indebtedness should be offset against the claim as allowed. The master was of opinion that Von Fest’s right to retake the moneys allowed him is not subject to the offset claimed by the trustee. Whatever may be .the principle of law involved, it is beyond question only proper that Von Fest, if he is to have his equities recognized in this proceeding, should himself recognize those of the general creditors of Pacat. The order will provide, therefore, that Von Fest’s claim, as allowed, shall be paid only as and when he discharges his indebtedness to the estate.
The same may be said as to Ranahan’s indebtedness to the estate, unless that firm has a claim as a general creditor against the estate in excess of its indebtedness to Pacat.
Claims of Morris Shulman, Washington Roan & Trust Company, Josephthal & Co., Joseph Brecher, Ernest Grunsfield, and W. W. Ranahan & Co.:
The findings and conclusions of the master as to these claims will be confirmed, with the modification hereinbefore noted as to the Ranahan claim.
Claim of Zimmerman & Forshay:
Here, too, I think the master has reached the right conclusion. As I view the case, it is that, when it was ascertained by claimant and Pacat that the credit desired by the former could not be set up in the manner desired, owing to a decree of the Austrian govern[412]*412ment, a dispute arose as to whether claimant should be reimbursed' in kronen or in dollars. Kronen liad fallen in value, and Zimmerman & Forshay wanted the return of the dollars they had paid to Pacat. It was proposed that the dispute be arbitrated. Meanwhile the moneys remained with Pacat, and the credit was available to claimant, had it desired to take advantage of it upon the terms and condi-1 tions provided for by the Austrian government, or as suggested by Pacat. The master has found that Pacat did not, pending the determination of the dispute, undertake to hold claimant’s fund “in trust,” as claimed by Zimmerman & Forshay. I shall not disturb that finding. The result is that, during the period of its negotiations with Pacat, claimant was relying upon its credit. Inasmuch as bankruptcy came about before the dispute was settled, claimant’s rights are limited to those of a general creditor. The report denying claimant’s right to priority is confirmed.
Claim of East River National Bank:
The master’s report is confirmed.
Claim of M. Berardini State Bank:
So far as the master deals with claimant’s right to recover 750,000 lire now on deposit in Crédito Italiano, and to which the trustee and claimant each assert title, I am in accord with his decision; that is, I hold title in such lire not to be vested in claimant, although such was in effect the claim asserted in the petition. ' By reason of the text of the petition and claimant’s main theory thereon, the master did not consider the question as to whether claimant is entitled upon any other theory to recover the money paid for the credits for which it contracted, even assuming its ability to trace such funds into the hands of the trustee, or into the fund in the hands of Crédito Italiano; in other words, the master, in effect, assumed claimant to have waived any .demand for relief, save that specifically set forth in the petition. An examination of the record upon this claim shows that the petition was filed upon April 15, 1921. Hearings thereon began December 5, 1922, and in their course a lengthy colloquy as to the nature of the claim took place between the master, attorney for the claimant, and the trustee. It started as follows:
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KNOX, District Judge.
The various claims passed upon by the special master will be disposed of in the order in which he treated them:
Claim of National Shawmut Bank of Boston:
For the reasons specified by the .master in dealing with the reclamation of Shawmut, I shall confirm the report thereon. As was said by Mr. Chief Justice Hiscock in Equitable Trust Co. v. Keene, 232 N. Y. 290, 133 N. E. 894, 19 A. L. R. 1137:
“Tbe fact that the [exchange] transaction is to be effectuated by cable is of course immaterial; the principles defining the nature of the transaction are not any different than they would be if the transaction was to be accomplished by letter or special messenger. The cable gives needed speed to the operation but does not change its nature.”
What Pacat undertook to do for Shawmut was that it would make available to the latter at a specified time and place a specified amount of foreign exchange. There was the further engagement between the parties that, upon the day the exchangé was made available to Shawmut, the consideration for the service should be paid to Pacat. In this sense, therefore, the matter was a cash transaction, and did not involve the extension of credit as between Pacat and Shawmut. Performance by one party was conditional upon performance by the other, and default by the latter would prevent title to the money or the exchange, as the case might be, from passing to him.
The nature of the transaction makes it impossible that performance by the parties should be exactly simultaneous. Not only the means of communication necessary to be employed, but differences in time between the points where the respective parties were to perform, would occasion some difference in the hour and minute of performance. But, if the law is to deal with practicalities rather than technicalities, I fail to see why the situation should be otherwise than it would have been had the transaction been consummated by special messenger, as was the case upon dissimilar facts, but upon a similar principle, in Matter of Perpall, 256 Fed. 758, 168 C. C. A. 104. Up[411]*411on the authority of, that decision, and others of a like nature, the master’s report upon the Shawmut claim will be confirmed. The claim, is also sustained upon the ground of the bankrupt’s fraud, which is the subject of discussion by the master.
Claim of Imbrie & Co. :
The facts upon which this claim is founded are substantially identical with those present in the Shawmut claim. The ruling there made will support the master’s finding, and the same is confirmed.
Claim of Isidor Stern:
The facts here bring the claim squarely within the decision of our Circuit Court of Appeals in Re Bolognesi & Co., 254 Fed. 770, 166 ,C. C. A. 216, and by reason thereof it must be disallowed, as was done by the master.
Claim of Reonard Pasqualicchio:
This claim is also within the Bolognesi Case, supra, and, were it not for the consideration of Pacat’s fraud, the law would require its disallowance. However, the date upon which the transaction was had entitles the claimant to rescission upon the ground of fraud, and for such reason the claim is allowed.
Claim of Alexander Von Fest:
This claim was allowed by the master upon the basis of Pacat’s insolvency and fraudulent intent. The master’s finding is confirmed. The present claimant, it appears, is indebted to the bankrupt estate in the sum of $3,055.13 upon an independent transaction. The trustee in bankruptcy takes the position that this indebtedness should be offset against the claim as allowed. The master was of opinion that Von Fest’s right to retake the moneys allowed him is not subject to the offset claimed by the trustee. Whatever may be .the principle of law involved, it is beyond question only proper that Von Fest, if he is to have his equities recognized in this proceeding, should himself recognize those of the general creditors of Pacat. The order will provide, therefore, that Von Fest’s claim, as allowed, shall be paid only as and when he discharges his indebtedness to the estate.
The same may be said as to Ranahan’s indebtedness to the estate, unless that firm has a claim as a general creditor against the estate in excess of its indebtedness to Pacat.
Claims of Morris Shulman, Washington Roan & Trust Company, Josephthal & Co., Joseph Brecher, Ernest Grunsfield, and W. W. Ranahan & Co.:
The findings and conclusions of the master as to these claims will be confirmed, with the modification hereinbefore noted as to the Ranahan claim.
Claim of Zimmerman & Forshay:
Here, too, I think the master has reached the right conclusion. As I view the case, it is that, when it was ascertained by claimant and Pacat that the credit desired by the former could not be set up in the manner desired, owing to a decree of the Austrian govern[412]*412ment, a dispute arose as to whether claimant should be reimbursed' in kronen or in dollars. Kronen liad fallen in value, and Zimmerman & Forshay wanted the return of the dollars they had paid to Pacat. It was proposed that the dispute be arbitrated. Meanwhile the moneys remained with Pacat, and the credit was available to claimant, had it desired to take advantage of it upon the terms and condi-1 tions provided for by the Austrian government, or as suggested by Pacat. The master has found that Pacat did not, pending the determination of the dispute, undertake to hold claimant’s fund “in trust,” as claimed by Zimmerman & Forshay. I shall not disturb that finding. The result is that, during the period of its negotiations with Pacat, claimant was relying upon its credit. Inasmuch as bankruptcy came about before the dispute was settled, claimant’s rights are limited to those of a general creditor. The report denying claimant’s right to priority is confirmed.
Claim of East River National Bank:
The master’s report is confirmed.
Claim of M. Berardini State Bank:
So far as the master deals with claimant’s right to recover 750,000 lire now on deposit in Crédito Italiano, and to which the trustee and claimant each assert title, I am in accord with his decision; that is, I hold title in such lire not to be vested in claimant, although such was in effect the claim asserted in the petition. ' By reason of the text of the petition and claimant’s main theory thereon, the master did not consider the question as to whether claimant is entitled upon any other theory to recover the money paid for the credits for which it contracted, even assuming its ability to trace such funds into the hands of the trustee, or into the fund in the hands of Crédito Italiano; in other words, the master, in effect, assumed claimant to have waived any .demand for relief, save that specifically set forth in the petition. An examination of the record upon this claim shows that the petition was filed upon April 15, 1921. Hearings thereon began December 5, 1922, and in their course a lengthy colloquy as to the nature of the claim took place between the master, attorney for the claimant, and the trustee. It started as follows:
“The Master: Now, I want to ask claimant’s counsel a question: * *■ * Do you assert here -the right to an order directing that the trustee recognize your claim to a lien on the funds in Crédito Italiano in Italy? Is that the exact nature of your daim, or do you claim the right to impress a lien upon any moneys now in the National Park Bank?”
After more or less restatement of the same proposition, Mr. Mackey, of counsel for Berardini, said:
“Yes; I am presenting my proof in accordance with the words of that petition.
“The Master: Very well.
“Mr. Mackey: And in addition to that I would like to say we claim title to those funds where the credit was established for our benefit.
“The Master: Which funds?
“Mr. Mackey: The funds in Italy to which the Teceiver has laid claim.
[413]*413“The Master: Exactly. Now I understand your claim fully, and I understand you do not take the position that your money or dollars that you paid are to be returned to you; you take the position that you are entitled to these specific lire out of the Italian funds, and that the trustee is acting inequitably in barring you from getting those lire.
“Mr. Mackey: And we also claim that, if he does not withdraw his claim, we are entitled to the dollars here. I do not want to limit myself in any way, shape, or form.
“The Master: Well, the point is that you have limited yourself in your petition. That is exactly what I want to bring to your attention. You are not, as I understand it, asserting any lien.
“Mr. Mackey: Then I would like to amend my petition.”
Objection to this being made by the attorney for the trustee and by counsel for the Shawmut Bank, the master said:
“I do not think I have any power to allow you to amend the petition.
“Mr. Mackey: I make the application and take an exception,”
He added:
“My desire is not to assert any different claim, but to supplement it, so as to make the prayer read in the alternative — that, in the event of the receiver being not directed to withdraw his claim, he be directed to repay in the money delivered to the Pacat Finance Corporation.”
The master denied the application, suggesting, however, that if he could be shown to have authority to allow an amendment of the petition he would permit the application to be renewed, suggesting that, although he would not grant an adjournment for an application to amend to be made to the court, such application could be made without his permission. So far as appears, the petition of claimant was not amended, but at a subsequent stage of the proceedings counsel for Berardini made manifest their desire for alternative relief in the event the decision was against the claimant as to specific relief asked for in the petition. For example, Mr. Rowe, also of counsel for Berardini, said:
“I wish to state that we do not limit our claim in any respect or in any aspect: that we are asking for other or further relief, and we ask for any relief that equity or law entitles us to under our claim, of any character, and that we express no limitation of the relief to which we are entitled, so long as it is justified by the facts on the hearing. That is all.”
The point of all this recital is that the exchange transactions between the claimant and Pacat were upon terms calling for “payment here and abroad upon” the same day. If it be the fact that the payments made by Berardini can he traced into funds which came or will come into the hands of the trustee, the ruling of the master, assuming claimant not to have barred itself from having such relief, should he the same as was granted upon similar facts in the Shawmut claims; that is to say, the Berardini transactions were of a cash, nature in the same sense that the Shawmut transactions were of that character. In the argument before me, it was insisted that Berardini’s funds can be so traced into the hands of the trustee. Under the rule of marshaling assets that must be adopted, I doubt if this be true. Nevertheless it has seemed proper for me to rule as to whether claimant, [414]*414notwithstanding its petition, should be awarded the relief which the documents evidencing its transactions with Pacat seem to justify.
In my opinion, claimant, although not entitled upon the present proof to. the specific relief asked for in its petition, should be permitted to have any alternative relief warranted by the facts. The prayer in the petition asked for other and different relief. The question as to the dual nature of claimant’s contention arose at an early stage of the hearings upon the Berardini claim, and any objection having to do with surprise upon the part of the trustee, or of other claimants, might easily have been overcome. Indeed, no objection upon the ground of surprise was put forth. The courts have been liberal in permitting amendments to claims, and in granting alternative relief where the rights of other litigants were not prejudiced. So far as I see, there can be no real prejudice here, save, perhaps, that further proof upon the tracing of the Berardini money may be necessary.
My conclusion is: I agree with the master in holding that none of the funds in Crédito Italiano were appropriated in a legal sense to Berardini. The direction that such appropriation be made was dishonored, due to the overdrafts of Pacat. Upon such theory of appropriation, the claim must be disallowed. Since, however, the principle of concurrent condition should be applied to the Berardini-Pacat contracts, and as Pacat defaulted in performance, it should be said that the moneys obtained from Berardini were held in trust by Pacat. The claim accordingly will be allowed for tracing and marshaling.
From the recora as now made up, it seems reasonably certain that none of the money on'deposit in the city of New York to the credit of Pacat, as of the day of bankruptcy, or that is now on deposit in the city of New York to the credit of the trustee, represent payments made by Berardini. In order to recover therefrom, claimant must identify and trace his moneys into that specific fund. In re Jarmulowsky (C. C. A.) 261 Fed. 779. It is unnecessary, in consequence, that the marshaling and distribution of trust funds in the New York bank accounts should await any effort claimant desires to make in the way of tracing its money into foreign credits of the bankrupt. The principle to be Used in marshaling is that described in Re Bolognesi & Co., 254 Fed. 770, 166 C. C. A. 216.
In view of the close relationship existing between the present claimant and La Banca M. Berardini, and the fact that the latter institution is now litigating in the courts of Italy with the receiver and trustee of thfe bankrupt estate as to the ownership of the same lire which are the subject-matter of this claim, and which are now on deposit in Crédito Italiano, it seems proper that I should require, as a condition of granting relief to claimant, as hereinbefore set out, that the said litigation in Italy be ended, and that the said lire, or their equivalent in dollars, be transferred to New York, to await the outcome of claimant’s effort to trace its funds, or a review by the Circuit Court of Appeals of my holding in reference thereto.
The record also indicates that, although the claimants Leonard Pasqualicchio and British Bank of Foreign Trade have had their [415]*415daims allowed, they cannot participate in the funds now available for distribution, in that they failed to trace their funds into the same.
The findings of the master as to the allowance or disallowance for tracing and marshaling of other daims, which I have not specifically mentioned, and upon which he has passed, are confirmed.
The fees of the special master will be fixed at $6,000. I seriously doubt if the payment to him of this sum will be compensatory, and if it thereafter be shown that the estate is reasonably able to pay a larger amount, application may be made therefor. Hearings _ incident to the reclamations have been many, and extended over a period of more than a year; not only this, but the matters involved have been intricate and - confused, requiring close attention and the application of much time to their disposition. All of this the master has given, and through his directions the attorney for the trustee and other counsel have presented an excellent record, which, together with the master’s report, has been of much help to the court.
The attorney for the trustee will likewise be allowed the sum of $6,000 for his services in connection with the redamation.