court, and its order dismissing the action for want of jurisdiction was affirmed. It was said in the opinion (p. 339):

"The arrangement by which, without any valuable consideration, the stockholders of the Virginia corporation organized a Pennsylvania corporation and conveyed these lands to the new corporation for the express purpose-and no other purpose is stated or suggested-of creating a case for the Federal court, must he regarded as a mere device to give jurisdiction to a Circuit Court of the United States and as being, in law, a fraud upon that court, as well as a wrong to the defendants. Such a device cannot receive our sanction. The court below properly declined to take cognizance of the case."

In the case before us there were also two corporations— distinct legal entities-yet bearing the same name, the Alabama and Georgia Manufacturing Company. It may well be doubted whether any injustice has been done to the Alabama company by the long litigation. In the brief of one of the counsel for respondents, after stating the organization of the Alabama company, it is said:

"In order to carry out the general plans and purposes of the incorporators and organizers of the said Alabama company, thus already organized and established, it was deemed necessary and important that these same original incorporators and organizers of the said Alabama corporation and their successors should control the water rights of the Chattahoochee River, not only through the riparian rights already granted them on the western or Alabama side of the river by the State of Alabama, but through those of the State of Georgia on the eastern side of the river as well, i. e., at the point on the eastern bank opposite where their manufacturing plant in Alabama had already been located. These incorporators had in view the then purpose of utilizing, if not immediately, at least at some future time, the recognized fine water power of the intervening Chattahoochee River, by the proposed acquisition of other lands on the eastern or Georgia side of the river, and the erection thereon of another independent manufacturing plant, and

in such event, of using Columbus, or La Grange, Georgia, for its offices and shipping points. To that end the said incorporators did not elect to ask the legislature of Georgia for any express statutory license authorizing the preexisting Alabama company to exercise in Georgia the same powers and rights which had been given it by the parent State of its creation (Alabama), i. e., that it be 'domesticated' in Georgia by the laws of that State, but the application was for the creation of a separate and independent corporation under the same name; and on March 21, 1866, 'The Alabama and Georgia Manufacturing Company,' as a second, distinctly independent corporation, was granted a charter by the legislature of the State of Georgia."

Whatever may have been within the scope of the ulterior purpose of the Georgia incorporation, the immediate purpose was the development of a single plant, and that purpose was carried into effect. By the charters the office of the Alabama company was located in Alabama and that of the Georgia company in Georgia. When the trust deed was executed it was executed in the name which was common to both corporations, but in pursuance of resolutions passed at an office in Georgia. It would be unjust to impute to these incorporators a design to mislead the holders of the indebtedness of the company by giving to them a security which rested alone upon the inconsiderable fraction of property then located in Georgia, when, on the face of the instrument, it purported to convey the entire plant. Evidently the proceedings were had on the supposition that there was but a single entity. That entity was indebted, and it gave the trust deed as security therefor. When the foreclosure suit was filed it would be also an unjust imputation to suppose that the owners of the property carried on the litigation for years, knowing that the proper parties were not present in court and that the outcome of that litigation meant nothing. Evidently this defense, springing from the existence of two corporations, was an afterthought, when all other resources had failed, and equity may well say that to

sustain the present contention would give judicial sanction to inexcusable trifling with courts. It is always to be understood that Federal tribunals are not moot courts, and that parties having substantial rights must when brought before those tribunals present those rights or may lose them.

The judgment of the Court of Appeals is reversed and that of the Circuit Court is

Affirmed.

HOLDEN v. STRATTON.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE NINTH

CIRCUIT.

No. 209. Submitted April 6, 1905.-Decided May 8, 1905.

The statute of the State of Washington, Laws of 1897, p. 70, exempting proceeds or avails of all life insurance from all liability for any debt, is not in conflict with the constitution of that State as construed by its highest court and exempts the proceeds of paid-up policies, and endowment policies, payable to the assured during his lifetime. Courts will not read into a broadly expressed state statute of exemption limitations which do not exist therein because they do exist in similar statutes of other States or because they decm the limitations equitable. To do so would not be construction of the statute but legislation; and the broad terms of the statute show an intention of the legislature of the State to adopt broader and more comprehensive exemptions than those adopted by the other States.

Policies of insurance which are exempt under the law of the State of the bankrupt are exempt under § 6 of the bankrupt act of 1898, even though they are endowment policies payable to assured during his lifetime and have cas. surrender values, and the provisions of § 70a of the act do not apply to policies which are exempt under the state law.

It has always been the policy of Congress, both in general legislation and in bankrupt acts, to recognize and give effect to exemption laws of the States.

SEPARATE proceedings in bankruptcy were begun in the District Court of the United States for the District of Washington, Northern Division, against Daniel N. Holden and

Lizzie Holden, his wife. They were consolidated. Both the parties were adjudicated to be bankrupt, and J. A. Stratton became the trustee of both estates.

All the liabilities of the bankrupts were contracted between the first day of September and the first day of December, 1900, and the creditors of each were the same. There were two policies upon the life of Daniel N. Holden, one for $2,000, the other for $5,000, issued by the same company. Both bore date June 15, 1894, having been issued as the result of an arrangement by which the insured and his wife as the beneficiary surrendered a policy for $10,000, dated May 21, 1890.

The policy for $2,000 was a full-paid, non-participating one, and the amount became due only upon the death of the insured, and was then payable to the wife, or in the event she did not survive her husband, to his executors, administrators or assigns. The policy for $5,000 was on what was termed the semi-tontine plan. An annual premium of $233.80 was required to be paid for ten years from the date of the previous policy, which had been surrendered, that is, until May 21, 1900, and therefore at the date when the bankrupts contracted the debts set forth in their schedules and at the date of the adjudications in bankruptcy, this period had expired and no further payment of premiums was necessary. Upon the death of the insured the amount of the policy was to be paid to the wife as the beneficiary, or, in the contingency of her prior decease, to the executors, administrators or assigns of the insured. It was provided, however, that upon the completion of the tontine dividend period of twenty years-on May 21, 1910-if the insured was then alive, he or his assigns, if creditors, might surrender the policy and receive its full cash value, or a non-participating policy, payable to the original beneficiary, or if she was not alive, to the executors, administrators or assigns of the insured, or the option was given to keep the policy in force and to withdraw the surplus to the credit of the policy in cash, or use the same to purchase additional insurance. The bankrupts made application to have these policies set

Argument for Respondent.

198 U. S.

aside to them, because, it was asserted, they were exempt by the law of the State of Washington. This was resisted by the trustee upon the ground that the policies had a cash surrender value of $2,200, which it was the duty of the bankrupts to pay to the trustee as a condition precedent to the exemption of the policies. The referee sustained the claim of the trustee. His ruling was reversed by the District Court. On a petition for revision the Circuit Court of Appeals held that the bankrupts were obliged to pay the cash surrender value as asserted by the trustee. 113 Fed. Rep. 141. An appeal was prosecuted to this court and was dismissed. 191 U. S. 115. This writ of certiorari was then allowed. 193 U. S. 672.

Mr. P. P. Carroll and Mr. John E. Carroll for petitioners: The absolute and unqualified rule of exemption as declared in § 6 of the bankruptcy law is negatived by the proviso in $ 70, and the policies are exempt. Steele v. Buel, 104 Fed. Rep. 968; Pulsifer v. Hussey, 54 Atl. Rep. 1076; Lockwood v. Exchange Bank, 190 U. S. 294. Re Scheld, 104 Fed. Rep. 870; Re Lange, 91 Fed. Rep. 361, do not apply. Exemption statutes are to be liberally construed. Packing Co. v. Jeff, 11 Washington, 466; Re Kane, 127 Fed. Rep. 552.

The state law must, independently of other authority, control the decision in this case. Re Wilson, 123 Fed. Rep. 20. For definition of cash surrender value see Pulsifer v. Hussey, supra, and Re Welling, 113 Fed. Rep. 189.

Congress has no power to abrogate state exemptions. Re Heilbron, 14 Washington, 536; Cooley's Const. Lim. 29, 61; Re Beckerford, 1 Dillon, 45.

Mr. Frederick Bausman and Mr. Hugh A. Garland for respondent:

Supposing these not to be cash surrender policies they are property capable of passing to the trustee. Section 70a, bankrupt act; Page v. Edmunds, 187 U. S. 596; Fuller v. N. Y. Fire Ins. Co., 184 Massachusetts, 12.

As to whether policies paid up like these, and yet not im