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Central Law Journal.
have been vexatious and troublesome for them to handle, but in spirit of 'let the fu
ture take care of itself' that seems to have ST. LOUIS, MO., SEPTEMBER 6, 1901
possession of the country, the criticisms that are heard in every direction show that our
proverbial insistence upon fair play and the In this day of extensive corporate enter golden rule is still strong and vigorous if not prise, one of the schemes often resorted to paramount to the selfishness of the age. The by promotors to induce the unwary to sub majority of the court may be right in holdscribe for stock in a proposed corporation is ing that the constitution does not follow the offering to issue to them full.paid stock flag until congress sends it after it, but it is for a small per cent. of its face value, and hard to believe that the framers of the conagreeing further in behalf of the corporation stitution bad any thought of controlling or that no more than that per cent. will ever be regulating its blessings for mankind by the called for by the corporation. While such whims and political intrigues of congress, agreement is good against the corporation, even if capable of creating the anomaly of it is not good against creditors of the corpo a congress controlled by the constitution ration who have extended credit to it on the controlling the constitution.” In our edifaith that its corporate stock is payable in torial of June 21, 1901, 52 Cent. L. J. 477, full, and without notice of a different agree we endeavored to show that in the light of ment between the corporation and its stock plain wording of the constitution and its holders, the unpaid subscriptions being subsequent interpretation by the courts, the assets for the payment of such creditors on decision of the court in these cases was perthe insolvency of the corporation. This fectly correct. That, however, does not question arose and was so decided in | lessen the appropriateness of the comment the case of Bent v. Underdown (Ind.), 60 just quoted, but is rather an appeal to the N. E. Rep. 307, where the court gives this people than to the judiciary. excellent statement of the rule:
"An agreement between a corporation and The Supreme Court of New York furnished its stockholders that only a certain per cent. opportunity for an interesting discussion of of the stock subscribed by each stockholder
the question of the proper punisbment for shall be paid in is binding on the corpora different grades of professional miscondnct tion, and the corporation can collect the per
on the part of attorneys, in the recent case cent. specified and no more. But if such of Re Reifschneider, 69 N. Y. Supp. 1069. corporation becomes insolvent, such unpaid In this case a father, as guardian of his instock subscriptions are subject to be made jured child, desired to accept a railway assets for the benefit of all creditors who
company's offer to settle a damage suit for a gave credit to the corporation on the faith
sum which his attorneys thought inadequate. of its capital stock being paid in full, with An attorney in the employ of the defendant out any knowledge of such agreement.”
railway company got himself substituted for
plaintiff's attorneys by paying them a fee Gourick's Digest makes a very excellent furnished by defendant, and then, in the and pithy comment on the recent decision of capacity of plaintiff's attorney, advised and the United States Supreme Court in the In attempted to effect the settlement. The sular Tariff Cases, in which it was held that court was divided in opinion as to the dethe constitution did not follow the flag into gree of punisbment; the majority decision the territories of the United States, unless holding that while the attorney was guilty of congress so decreed by proper action. The conduct which was very unprofessional, such criticism referred to is as follows: “Whether conduct was not sufficiently flagrant to wittingly or unwittingly done, it is obvious justify disbarment, but was properly punishthat in holding that the constitution does not able by reprimand. The minority opinion follow the flag the supreme court relieved insisted on suspension or disbarment, and the legislative and executive branches of the after calling attention to the New York statgovernment of some problems that would | ute on the misconduct of attorneys uses this
strong language: “The standard of honor a mansion to which the remainder-man was enamong the members of the bar is high, and
titled in remainder. The tapestries in question has been so maintained by the natural and
bad been affixed to the walls of a drawing room
in the following way: strips of wood were fastinstinctive probity and purity of the profes
ened on the walls by nails, canvas was then sion, and it should never be lowered by the
stretched over the strips, and the tapestries were action of the court. · If a counselor refuses then stretched over the canvas and fastened by to sit down when told to do so by the court,
tacks to it, and pieces of wood mouldings fastened or uses intemperate language, the occasion
to the walls were placed round each piece of
tapestry. Portions of the wall not covered by might justly admit of a rebuke or reprimand.
tapestries were covered witb canvas, wbich was But the framers of the law never meant that
colored so as to harmonize with the tapestries. deliberate and persistent professional mis Byrne, J., considered that the tapestries had been conduct should be punlshed by a mere repri so affixed to the freehold as to be irremovable by mand from the bench.” We are inclined to
the tenant for life or his personal representative,
but the court of appeal (Rigby, Williams and favor the minority opinion to the extent of
Sterling, L. JJ.) took a more liberal view, and insisting that temporary suspension from
held tbat as the tapestries had been affixed to the practice would have been a more just and walls merely for purposes of decoration, they salutory punishment for the serious offense were removable by the tenant for life or her repcharged against this attorney. We are not
resentative, and though the latter sbould make unmindful of the fact, however, that this
good any damage to the wall occasioned by the
removal, he was not liable for the cost of entirely power in the court should not be exercised
redecorating the room. Although Williams, L. harshly, but in the wise discretion of the J., seems to think the principles laid down by court after taking into consideration the Lord Romilly in D'Eyncourt v. Gregory, L. R. 3 surrounding circumstances, and the causes
Eq. 382, were not in conflict with the present deor motives which prompted the unprofes
cision, Rigby, L. J. did not hesitate to say that
be thought the decision in that case was not right sional action. And in this connection the
“if it would apply to such a case as the present" plea of Justice Field in the case of Bradley
and ought not to be followed. v. Fisher, 13 Wall. 355, for a lenient policy in cases which are not exceedingly flagrant, INTOXICATING LIQUORS-UNLAWFUL RESALE. can be wisely followed: “Admission as an -A very difficult question was encountered by attorney,” says Justice Field, “is not ob
the court in the case of Graves V. Johnson tained without years of labor and study.
(Mass.), 60 N.E.Rep. 383. This suit was for the
price of intoxicating liquors sold in MassachuThe office which the party thus acquires is
setts. It was found that the plaintiff's agent supone of value, and often becomes the source
posed rightly, that the defendant intended to reof great honor and emolument to its posses sell the liquors in Maine unlawfully, but that the sor. To most persons who enter the profes plaintiffs and their agent were known by the desion it is the means of support to themselves
fendant to be indifferent to wbat he did with the
goods, and to have no other motive or purpose and to their families. To deprive one of an
than to sell them in Massachusetts in the usual office of this character would often be to de
course of business. The court held that although cree poverty to bimself and destitution to his the buyer of the liquor intended when he inade family. A removal from the bar should, the purchase to resell them in the state of Maine, therefore, never be decreed where any pun
contrary to the laws of that state, the seller's
mere knowledge of the buyer's intent will not ishment less severe, such as reprimand, tem
prevent recovery of the purchase price. The porary suspension or fine, would accomplish
court makes the following argument: the end desired.”
“The defendant was free to change bis mind, and there was no communicated desire of the different courts with regard to the same or sim- mained unfinished. These sums were made pay. ilar matters. Compare Hubbard y. Moore, 24 able each in respect of a breach of a single stipuLa. Ann. 591, and Michael v. Bacon, 49 Mo. 474, lation not involving payment of money, and with Pearce v. Brooks, L. R. 1 Exch. 213. But hence, according to the test stated above, they the decisions tend more and more to agree that were liquidated damages, notwithstanding that the connection with the unlawful act in cases | they were described as penalties. In Law v. like the present is too remote. McIntyre v. Local Board of Redditch (1892), 1 Q. B. 127, the Parks, 3 Metc. 207; Sortwell v. Hughes, 1 Curt. circumstances were similar, save that the sum 244, 247, Fed. Cas. No. 13,177 ; Green v. Collins, 3 was there described as liquidated damages," and Cliff, 494, Fed. Cas. No.5755; Hill v. Spear, 50 it was held to be such. The decision in the presN. H. 253, 9 Am. Rep. 205; Tracy v. Talmage, 14 ent case was to the same effect. A different case N. Y. 162, 67 Am. Dec. 132; Distilling Co. V. arises where the sum is made payable upon Nutt, 34 Kan. 724, 729, 10 Pac. Rep. 163; Webber breach of any one of a number of stipulations. v. Donnelly, 33 Mich. 469; Tuttle v. Holland, 43 Usually it will be treated as a liquidated sum, but Vt. 542; Braunn v. Keatly, 146 Pa. 519, 524, 23 if the breach of one or more of the stipulations Atl. Rep. 389; Wallace v. Lark, 12 S. Car. 576, | involves payment of a smaller fixed sum of 578, 32 Am. Rep. 516; Rose v. Mitchell, 6 Colo. | money, or is trivial in its nature, then the oppo102; Jameson v. Gregory's Exr., 4 Metc. (Ky.) site construction prevails, and the sum payable, . 363, 370; Bickel v. Sheets, supra; Hubbard v. being a penalty, is reduced to the amount of the Moore, supra; Michael v. Bacon, supra."
plaintiffs to co-operate with the defendant's presNOTES OF IMPORTANT DECISIONS.
ent intent, but on the contrary an understood in
difference to everything beyond an ordinary sale FIXTURES_TAPESTRIES AFFIXED TO WALL in Massachusetts. It may be that, as in the case TENANT FOR LIFE - REMAINDER-MAN.-In re of attempts (Com. v. Peaslee (Mass.], 59 N. E. De Falbe, Ward v. Taylor (1901), 1 Ch. 523, re. | Rep. 55; Com. v. Kennedy, 170 Mass. 18, 22, 48 ported in the Canada Law Journal, was a contract | N. E. Rep. 770), the line of proximity will vary between the personal representatives of a de. somewhat according to the gravity of the evil ceased tenant for life and remainder-man, touch apprehended (Steele v. Curle, 4 Dana, 381, 385ing the right to remove certain tapestries whicb 388; Hanauer v. Doane, 12 Wall. 342, 346, 20 L. had been fixed by the deceased tenant for life to | Ed. 439; Bickel v. Sheets, 24 Ind. 1, 4), and in
loss actually sustained Wallis v. Smith, 31 W. R.
214, 21 Ch. Div. 243; Elpbinstone v. Monkland DAMAGES - DISTINCTION BETWEEN LIQUI
Iron Co., 35 W. R. 17, 11 App. Cas. 332.- Solic
itors' Journal. DATED DAMAGES AND A PENALTY.-When the courts depart from the ordinary practice of judg TAXATION-EXEMPTION OF PROPERTY USED ing of the intention of the parties to a contract by PARTLY FOR RELIGIOUS SERVICES AND PARTLY the words they have used, and look beyond the AS A SOURCE OF REVENUE.-A most valuable anwords to discover that intention in the circum notation on the right of exemption of property stances of the transaction, they embark upon a i used for religious or charitable purposes, but also eourse of doubtful utility and open the way for as a source of revenue for the same purposes, aplitigation. Such has been the case with the well pears in the opinion of Bartch, J., in the recent known line of decisions as to the effect of describ case of Parker v. Quinn (Utah), 64 Pac. Rep. 961. ing a fixed sum made payable upon a breach of In that case a society organized exclusively for contract as either a penalty or liquidated dam mission work and other charitable purposes ages. These expressions do no more than give a owned certain premises in Salt Lake City. The prima facie indication of the meaning of the par upper floor of these premises was used for meetties, and before it can be said with any confidence ings and other work of the society, while the that a sum is a penalty—80 as in effect to give a lower floor was rented out at $25 per month, and right only to unliquidated damages-or liquidated the income used entirely in carrying on the work damages-80 as to give a right to recover the of the society. In a suit to enjoin the assessment specified amount-a careful inquiry must be made and taxation of the property, the court held that as to the relation between this sum and the nature only that portion of the property of a religious or of the breaches in respect of which it is payable. benevolent society which is occupied and used exIt is probable that the whole doctrine in question clusively for the purpose for which the society arose from the absurdity of allowing payment of was organized, is exempt from taxation, and that a fixed sum as liquidated damages to be enforced the exemption does not extend to that portion not on breach of an agreement to pay a fixed smaller appropriated by the society to its own use, but sum, and in such cases the larger sum is treated held as a source of revenue, especially when the as a penalty, notwithstanding that the language value of each portion is separately ascertainable. used indicates the contrary. Astley v. Weldon, After alluding to the statutes specifying what 2 B. & P. 346. On the other hand, a fixed sum! property should be exempt from taxation, the made payable on the breach of a single stipula court said: tion, not itself involving payment of a sum of "Among the several classes of property exsmaller amount, will be treated as liquidated dam empt are lots with the buildings thereon ages. Of this nature were the sums fixed in Re used exclusively for either religious worship or An Arbitration between White and Arthur charitable purposes. Only such of the society's (Time, 3d inst.), decided by a divisional court property, therefore, as is occupied and used ex(Kennedy and Phillimore, JJ.) recently. A con clusively for charitable purposes, is exempt from tract bad been made for the installation of electric taxation. It follows that the exemption does not lighting in a theater which was in course of erec extend to that portion not appropriated by the tion. Upon non-completion of part of the work society to its own use, but held as a source of revby a certain date a “penalty" of £15 a day was to enue. Especially is this so since the value of be payable, and upon non-completion of the re each portion is ascertainable, as appears from the mainder by another date, a penalty" of £3 a day findings of the court. Where, therefore, as in so long as the respective portions of the work re- this case, a portion of certain property owned by
a charitable institution is occupied and used by erty used for "purposes purely charitable.'' it for charitable purposes, and the other portion merely because certain patients pay for what they thereof is devoted to purposes of revenue, the receive, wbere it appears tbat any profit derived portion used and occupied for charitable pur therefrom is applied exclusively to the charitable poses is exempt, and the portion not so used purposes of the institution. State v. Powers. 74 and occupied is subject to taxation. “We are Mo. 476. Also, the case of North St. Louis Gymaware that a few cases bold that under such nastic Society v. Hudson, 12 Mo. App. 342, circumstances the exemption is lost as to the affirmed 85 Mo. 32, in which it was held that a whole property, and that some, on the contrary, scbool building exempted from taxation óso long hold that the whole property is exempt. We as it is used only for the purpose of education," think, however, that the weight of authority is in is not made taxable by the renting of a room harmony with the rule above stated, and that the therein for other purposes when the proceeds disposition of this case in accordance therewith thereof are used exctusively for the benefit of the is equitable and just. In City of Philadelphia v. schools. The following authorities hold tbat Barber, 160 Pa. 128, 28 Atl. Rep.644, it was held : whenever part of the property alleged to be ex•Where a part of a building is used for church
empt is used for other than the exempt purposes, purposes, and certain rooms in the building are the whole becomes taxable. Red v. Johnson, 53 rented for a school, the building may be divided Tex. 284; St. Mary's College v. Crowl, 10 Kan. for the purposes of taxation, and the portion used 451; Morris v. Lone Star Chapter, 68 Tex. 698. solely for church purposes be declared exempt from taxation.' County Comrs. of Frederick Co. v. Sisters of Charity of St. Joseph, 48 Md. 34, is a VESTED INTEREST OF BENEFICIARY case where the proof showed that, among other UNDER A POLICY OF LIFE INSURimprovements which were claimed by the appel
ANCE. lees, a society organized for charitable purposes, to be exempt, there were one or more buildings The character of the beneficiary's interest in which a number of schools were required to
under a policy of life insurance is a question pay tuition at the rate of $250 per annum; and
of growing importance, and one often liti. the court held that so much of the property as was appropriated to this secular and educational
gated. Its difficulty lies in the fact tbat it is purpose .for revenue' was taxable, notwithstand comparatively a new question, having sprung ing the fact that the 'surplus revenue' thus into existence contemporaneously with modderived was devoted to charitable uses."
ern life insurance, and at once assuming The court cites the following recent authorities
many different and surprising aspects. In as sustaining its position: Sunday School Union v. City of Philadelphia, 161 Pa. 307, 29 Atl. Rep. 26;
the light of the common law a policy of life Detroit Young Men's Soc. v. Mayor, etc., of City | insurance was nothing more or less than a of Detroit, 3 Mich. 172; Trustees of Chapel of contract entered into between two parties Good Shepherd v. City of Boston, 120 Mass. 212; for the benefit of a third party. In Lang. City of Cambridge v. County Comrs. of Middle
dell's Cases on Contracts,' the learned author sex, 114 Mass. 337; Appeal Tax Court of Baltimore City v. St. Peter's Academy, 50 Md. 321;
says: “In truth, a binding promise to A to Appeal Tax Court of Baltimore City v. Grand pay one hundred dollars to B confers no Lodge A. F. & A. M., Id. 421, 429: Redemptorists right upon B in law or equity. It confers v. Howard Co. Comrs., Id. 449; Ft. Des Moines no authority upon the promisor to pay the Lodge v. Polk Co., 56 Iowa, 34, 8 N. W. Rep. 687;
money to B, but the authority may be reMulroy v. Churchman, 52 Iowa, 238, 3 N. W. Rep.
voked by A at any moment.” In the light 72; Society v. Kelley, 28 Oreg. 173, 42 Pac. Rep. 3; Elizabeth Library Assn. v. Leester, 28 N. J.
of modern statutes and public sentiment, Law, 103; First M. E. Church v. City of Chicago, however, a life insurance policy is something 26 Ill. 482; Presbyterian Theological Seminary v. more than a mere contract between two parPeople, 101 III. 578; State v. Board of Assessors,
ties for the benefit of a third. The contin35 La. Ann. 668; State v. Ross, 24 N. J. Law, 497;
gency upon which payment is to be made is Massenburg v. Grand Lodge, 81 Ga. 212, 7 S. E. Rep. 636; Morris v. Lone Star, 68 Tex. 698, 5 S.
the death of one of the parties, and the conW. Rep. 519; Bank of Commerce v. State, 104 U. sideration, the payment of certain stipulated S. 493, 26 L. Ed. 810; Young Men's Christian premiums, the amount of wbich is deterAssn. v. Mayor, etc., of City of New York, 113 N. mined by the probabilities of life in the Y. 187, 21 N. E. Rep. 86.
obligee. It is evident that unless sustained Before dismissing this subject, it might be well
for other reasons such an agreement would to call attention to the authorities holding a different rule. Thus, in Missouri, it is held that a
have all the earmarks of a wagering contract, hospital building is not excluded from the benefits of a statute exempting from taxation prop- Langdell, Cases on Contracts (2d Ed.), p. 1021.
and, therefore, void on grounds of public of his, by deed or will, to transfer to any policy. There is only one reason which will other person the interest of the person sustain such a contract, i. e., that the third named.” This statement of the law, as the party for whose benefit the contract is made general rule upon this subject, is sustained is not a disinterested party, his pecuniary by the overwhelming weight of authority.5 interest in the life of the obligee, and in the The only authority holding to an absolutely contingency upon which payment is to be contrary doctrine is to be found in the decis. made, giving him the right to enforce the ions of the Supreme Court of Wisconsin.. agreement. A contract of this kind is usu To exactly define just wbat he meant by ally made for the benefit of wife or children "vested interest” is not an easy undertakor others dependent upon or having some ing, and the authorities themselves lend us pecuniary interest in the life of the insured, very little assistance. In the effort to litand is in the nature of an irrevocable trust erally interpret this doctrine and apply it conferred upon interested parties for their logically to all cases many difficulties are protection and indemnity against pecuniary encountered. Suppose by the terms or naloss by reason of his death in their lifetime.? ture of the contract the interest of the ben. This is undoubtedly the origin, and certainly eficiary is contingent upon surviving the inthe only reason for the modern doctrine of sured, or, as in endowment policies, continvested interest. Statutes which have hedged gent also on surviving the insured within the about the interest of the wife and children endowment period, or, as in accident polto the proceeds of insurance policies, of which icies, contingent not only on survivorship they were the beneficiaries against the claims within a definite time (accident policies beof creditors or the act of the insured himself, ing generally in force for only one year at a wbile giving force to the rule and defining time), but also contingent on the injury public sentiment, were not necessary to its causing the death of the insured being the existence nor gave any reason for its exten result of an accident of the particular desion.3
scription named in the policy. In such The clearest statement of what is known as cases can the interest of the beneficiary, the doctrine of vested interest, in its applica- which is plainly contingent as to its enjoytion to the construction of life insurance ment, be considered at the same time and policies, is to be found in the opinion of Ful. for some purposes as vested. These difficul. ler, C. J., in tbe case of Central Bank v. ties, in aggravated form, were encountered Hume,' where the learned judge said: “We by the court in the case of Lockwood v. Inthink it cannot be doubted that in the in surance Co.? In this case the policy was stance of contracts of insurance with a wife payable to the insured in twenty years, if or children, or both, upon their insurable in living ; but in case of his death before the terest in the life of the husband or father, completion of the endowment period, then to the latter, while they are living, can exercise A, if living, and, if not, then to B and C. no powers of disposition over the same with The court said: “The brief of the plaintiff out their consent, nor has he any interest is based upon the theory that the interests of therein of which he can avail bimself, nor the beneficiaries were contingent, that the upon his death have his personal representa insured could deal with the policies as he tives or his creditors any interest in the pro. chose. Such, however, is not the rule of ceeds of such contracts wbich belong to the law governing contracts of life insurance. beneficiaries to whom they are payable. It is indeed the general rule that a policy, and 6 Pingrey v. Insurance Co., 144 Mass. 374; Chapin the money to become due under it, belong
v. Fellowes, 36 Conn. 132; Glanz v. Gloeckeler, 104 Ill.
573; Small v. Jose, 86 Me. 120; Lockwood v. Insurance the moment it is issued to the person or per Co., 108 Mich. 334; Splawn v. Chew, 60 Tex. 532; sons named in it as the beneficiary or ben Johnson v. Hall, 55 Ark. 210; Smith v. Insurance Co. eficiaries, and that there is no power in the
44 Atl. Rep. 531; Wilmaser v. Insurance Co., 66 Iowa
| 417; Packard v. Insurance Co., 9 Mo. App. 469; Van person procuring the insurance by any act
Bibber v. Van Bibber, 82 Ky. 347; Allis v. Ware, 28
Minn. 166; Brown's Appeal, 125 Pa. St. 303. 2 See Ryan v. Rothweiler, 50 Ohio St, 595.
6 Clark v. Durand, 12 Wis. 223; Kernan v. Howard, 3 Hubbard v. Stapp, 32 Ill. App. 541.
23 Wis. 103; Breitung's Estate, 78 Wis. 33. 4 128 U. S. 195.
7 108 Mich. 334.