other rights of property and to deprive it of equal protection of the laws.

An indispensable preliminary to a solution of this constitutional problem is to visualize a bit of judicial history. When the courts were presented with the question of the legality of labor unions and the methods these organizations might employ to gain their ends, they based their decisions, more or less consciously, upon considerations of social policy.3 In deciding on the legality of such actions as pursued by the defendants in the principal case, courts have reached different conclusions. The Massachusetts Supreme Court, Mr. Justice Holmes dissenting, pronounced against the legality of the conscription of neutrals. This decision on what is essentially a question of social policy the Massachusetts legislature has attempted to reverse by the statute presented in the principal case, but now the court says that the Constitution of the United States forbids any impairment of this recognized property right by elimination of remedies. It must be stated frankly that the court is using the Constitution to impose its views of social policy on the state. Those state courts that recognized the conscription of neutrals equally decided a question of social policy, but as this view coincided with the legislative, no clash occurred on the battlefield of constitutional law."

But even though this survey shows that we are dealing with a conflict between the social and economic views of two coördinate branches of the government over a problem intrinsically legislative, it is perhaps better to admit that the freedom to contract with regard to labor unrestrained by secondary labor boycotts is now, in view of past decisions, a right of property. Then arises the question whether the legislature had the right to discriminate between this and other forms of property in regard to injunctive remedies. Not only is there a discrimination relative to other

* See the great opinion by Shaw, C. J., in Commonwealth v. Hunt, 4 Met. (Mass.) III; also the dissent of Holmes, J., in Vegelahn v. Guntner, 167 Mass. 92, 104, 44 N. E. 1077, 1079. In Plant v. Woods, 176 Mass. 492, 502, 57 N. E. 1011, 1015, the court said: "The necessity that the plaintiffs should join this association is not so great, nor is its relation to the rights of the defendants, as compared with the right of the plaintiffs to be free from molestation, such as to bring the acts of the defendants under the shelter of the principles of trade competition. Such acts are without justification, and are therefore malicious and unlawful."

4 These cases have recognized acts as lawful. National Protective Ass'n of Steam Fitters and Helpers v. Cumming, 170 N. Y. 315, 63 N. E. 369. Lindsay & Co. v. Montana Federation of Labor, 37 Mont. 264, 96 Pac. 127. Parkinson Co. v. Building Trades Council, 154 Cal. 581, 98 Pac. 1027. Contra: Brennan v. United Hatters of No. Am., 73 N. J. Law 729, 65 Atl. 165. Erdman v. Mitchell, 207 Pa. St. 79, 56 Atl. 327. 5 Plant . Woods, 176 Mass. 492, 57 N. E. 101. In his dissenting opinion Mr. Justice Holmes dwells on the nature of the problem involved and the proper mode of approach to a solution.

The question involved in this case was presented by another Massachusetts case recently decided. Commonwealth v. Boston & Me. R., 222 Mass. 206, 110 N. E. 264. See the suggestive article of Professor Felix Frankfurter, "Hours of Labor and Realism in Constitutional Law," 29 HARV. L. REV. 353-372.

7 This situation rouses interesting speculation. Suppose that the legislature should declare illegal the compound labor boycott legalized by the courts. It cannot reasonably be imagined that this statute could be attacked as unconstitutional, yet it presents the converse of the principal case. Here the question of property rights cannot be put forward to obscure the legislative nature of the problem.

8 For treatment of this and similar constitutional questions along the proper line of approach, sec: Muller v. Oregon, 208 U. S. 412; Ritchie & Co. v. Wayman, 244 Ill.

species of property, but also to freedom of contract in other than labor situations. The court should not declare unconstitutional this distinction between remedies for different classes of property, unless the classification is clearly arbitrary or unreasonable. Whether this can be said in the case of the legislation now in question need not be finally decided here. It is sufficient to point out that a decision cannot be reached by trying to piece statute and Constitution together like a jig saw puzzle.10 There is necessary a thoroughgoing study and appreciation of the facts, as well as of the policy sought to be enforced by the legislative act in question." Only if after such investigation the court is still convinced that the classification is without reasonable basis should it declare the action of the legislature void. The unfortunate method of the statute, and perhaps insufficient pressing in argument of the social data, are undoubtedly responsible for the unsatisfying character of the decision that was rendered.

CONSTITUTIONALITY OF A TAX ON INCOME DERIVED FROM EXPORTS. A recent case raises the question whether there are not certain sources of income, other than those specifically enumerated in the Federal Income Tax Law of 1913,1 which are exempt from taxation. A corporation, whose business consisted largely in exportation, sought to recover such proportion of the corporate income tax as was paid on their export trade. They contended that it was an unconstitutional export tax, 2 but it was held that they might not recover. Peck & Co. v. Lowe, 55 N. Y. L. J. 981 (U. S. Dist. Ct., S. Dist. N. Y.). It is certainly arguable that a tax on net incomes, derived to a large extent from exporting, is a tax on exports. The question is a new and very close one, and can be approached only by analogy and analysis. It is clear that a tax on the various instrumentalities used in exporting is unconstitutional. An income tax, however, attaches to the proceeds after the actual act of exportation is completed, and so the "instrumentalities" cases are not conclusive in

3

509, 91 N. E. 695; Miller v. Wilson, 236 U. S. 373; People v. Schweinler Press, 214 N. Y. 395, 108 N. E. 639; and Mr. Justice Holmes' dissent in Adair v. United States, 208 U. S. 161, 190.

Hadacheck v. Sebastian, 239 U. S. 394, 413; Price v. Illinois, 238 U. S. 446, 452. 10 For expressions of the line of approach insisted on, see Dean Pound's article, "Liberty of Contract," 18 YALE L. J. 454; the paper by Professor Frankfurter referred to in note 6; the discussion in 28 HARV. L. REV. 790; and an article by Professor Ernst Freund, "Tendencies of Legislative Policy," 27 INTERNAT. J. ETH. 1, 23-24.

11 There should have been called to the attention of the court for instance the English Trades Disputes Act, 1906, 6 Edw. 7, c. 47, § 3, and the debates that preceded its enactment; also the Australian solution of the problem. See Judge Higgins, "A New Field for Law and Order," 29 HARV. L. REV. 13. Further discussion of value may be found in Gregory, "Government by Injunction," II HARV. L. REV. 487; Dunbar, "Government by Injunction," 73 L. QUART. REV. 347; Allen, "Injunctions and Organized Labor," 28 AM. L. REV. 878; Dean, "Government by Injunction," 4 GREEN BAG 540; Stimson, "The Modern Use of Injunctions," 10 POL. SCI. QUART. 189.

1 38 STAT. AT L. 166, 172.

2 U. S. CONST., Art. I, sec. 9.

* Fairbank v. Ú. S., 181 U. S. 283; U. S. v. Hvoslef, 237 U. S. 1; Thames, etc. Ins. Co. v. U. S., 237 U. S. 19. But see Goodwin, "U. S. v. Hvoslef," 29 HARV. L. REV. 469, where the doctrine of these cases is harshly criticised.

78

the present instance. On the other hand, goods are not relieved from the burdens that rest on all property similarly situated merely because they are intended for subsequent exportation. But it does not follow from this that the proceeds of such goods (after the exportation thereof) may be taxed as income. The cases dealing with taxes on gross incomes of corporations engaged in interstate commerce present a close analogy to the present situation. The various states may certainly tax the property of such corporations, along with other property within their territory," but since Congress regulates interstate commerce under the Constitution, it becomes necessary to determine whether these gross income taxes are state taxes on the commerce itself, and hence unconstitutional. In these cases the courts, looking at the substance rather than at the form, have held them unconstitutional. Wherever possible, however, they are sustained as license taxes for the privilege of doing business in corporate form, and, in so construing, the courts desert the rule of substance and go almost entirely on the form of the particular statute - whether or not it declares the imposition of a license or excise tax. Under this was declared construction the Federal Corporate Income Tax of 1909 constitutional as an excise.10 Such a rule of construction is unscientific and unsound," but even under this theory the tax in the present case cannot be upheld as an excise; it must stand or fall as an income tax. It was passed after an amendment 12 to the Constitution, rendered necessary by the decision in the Pollack Case,13 and intended to permit the

4 Coe v. Errol, 116 U. S. 517; Cornell v. Coyne, 192 U. S. 418, 427.

9

5 Pullman's Car Co. v. Pennsylvania, 141 U. S. 18; Western Union, etc. Co. v. Massachusetts, 125 U. S. 530, 552.

Philadelphia, etc. Steamship Co. v. Pennsylvania, 122 U. S. 326; Galveston, etc. R. Co. v. Texas, 210 U. S. 217. These cases overrule an earlier case upholding such a tax. See State Tax on Railway Gross Receipts, 15 Wall. (U. S.) 284. "It would seem to be rather metaphysics than plain logic for the state officials to say to the company: 'We will not tax you for the transportation you perform, but we will tax you for what you get for performing it.' Such a position can hardly be said to be based on a sound method of reasoning." Philadelphia, etc. Steamship Co. v. Pennsylvania, supra, at p. 336, per Mr. Justice Bradley. The application of this to the principal case seems clear. Maine v. Grand Trunk R. Co., 142 U. S. 217; New York v. Roberts, 171 U. S.

658.

8 See 24 HARV. L. REV. 563. "While the mere declaration contained in a statute that it shall be regarded as a tax of a particular character does not make it such if it is apparent that it cannot be so designated consistently with the meaning and effect of the act, nevertheless the declaration of the lawmaking power is entitled to much weight, and in this statute the intention is expressly declared to impose a special excise tax with respect to the carrying on or doing business by such corporation. Flint v. Stone Tracy Co., 220 U. Š. 107, 145, per Mr. Justice Day.

936 STAT. AT L. 112.

10 Flint v. Stone Tracy Co., supra.

11 "The distinction between a tax 'equal to' one per cent of gross receipts, and a tax of one per cent of the same, seems to us nothing, except where the former phrase is the index of an actual attempt to reach the property, and to let the interstate traffic and This is merely an effort to reach the gross receipts, the receipts from it alone. not even disguised by the name of an occupation tax, and in no way helped by the words 'equal to."" Galveston, etc. R. Co. v. Texas, supra, at p. 227, per Mr. Justice Holmes. See GRAY, LIMITATIONS OF TAXING POWER, 38.

12 "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration." U. S. CONST., AMENDMENT 16.

13 Pollack v. Farmers Loan, etc. Co., 158 U. S. 601. This case decided that income

taxation of incomes as such.14 And, as an income tax, it is indistinguishable from the Gross Income Cases in substance, by taxing the proceeds of exports it is taxing the exports themselves. The effect of such a tax is either to shift the burden to the consumer, to reduce the volume of exports through a rise in price, or to leave the burden on the exporter - all dependent on the elasticity of the demand for the particular commodity, and the extent to which outside competition is possible.15 In any case, this indirect effect is reached through the medium of a tax on exports.

Assuming, then, that the tax in Peck & Co. v. Lowe is an export tax, still perhaps the Sixteenth Amendment by its broad language abrogates the constitutional prohibition against such a tax, in so far as it is laid on the income derived from exports. If it has such an effect, the case is obviously correct, but as yet no judicial opinion has been handed down on either side; 16 the court in the principal case assumes that it does not have this effect, but expressly refuses to decide the question, reaching its decision by holding that the tax is not an export tax- a result with which we disagree. Since the amendment does not in terms repeal the constitutional prohibition, the repeal, if any, must be by implication. Repeals by implication are not favored, unless the earlier provision is so inconsistent with the later that the two cannot stand together." But there seems to be a clear repeal by the Sixteenth Amendment; if incomes, "from whatever source derived," may be taxed, a prohibition against taxing exports (assuming that such a tax would be an export tax) is utterly inconsistent with the amendatory provision, and is consequently repealed thereby. The principal case may be sustained upon this ground.

taxes on realty and personalty were direct taxes, and unconstitutional unless apportioned.

14 The present income tax taxes all persons, and so cannot be considered as an excise tax; it is not applied solely to corporations and the like, as was the tax of 1909. The provision as to corporations is a part of the whole and cannot be separated therefrom, and that whole is clearly a tax on income. In addition, the tax of 1909 specifically declared the imposition of an excise; the present tax is expressly laid on incomes without more qualification as to its purpose.

15 See BASTABLE, PUBLIC FINANCE, 3 ed., 571.

16 There is great diversity of opinion as to whether the amendment renders the income from state bonds, formerly exempt from federal taxation, open to the income tax. The answer depends upon whether the amendment be construed to open to taxation income from all sources, income from exports among them. See (in accord with such construction): STATE PAPERS OF GOV. HUGHES, 1910, quoted in FOSTER, INCOME TAX, 2 ed., par. 27; Opinion of Ex. Sen. Edmunds, 45 CONG. RECORD, 1957. See (contra such construction) Letter of Sen. Root, N. Y. WORLD, 1 March, 1910, quoted in FOSTER, INCOME TAX, 2 ed., par. 27.

17 U. S. v. Greathouse, 166 U. S. 601, 605. See I SUTHERLAND, STATUTORY CONSTRUCTION, 2 ed., par. 247; SEDGWICK, STATUTORY AND CONSTITUTIONAL LAW,

97.

RECENT CASES

ADVERSE POSSESSION - CONTINUITY — ADVERSE POSSESSION IN CONTEMPT OF COURT. In an action of trespass to try title plaintiff recovered judgment, and defendant was perpetually enjoined from trespassing on the land in question. Defendant continued to occupy the land for the period required by the Statute of Limitations. Plaintiff again brings an action of trespass to try title. Held, that title was acquired by adverse possession. Ludtke v. Smith, 186 S. W. 266 (Texas).

The case is more unique than difficult. It is well settled that the recovery of a judgment in ejectment, defendant remaining in possession, will not interrupt the running of the statute. Smith v. Trabue, 1 McLean 87, Fed. Cas. No. 13116; Jackson v. Haviland, 13 Johns. (N. Y.) 229; Smith v. Hornback, 14 Ky. 232; Mabury v. Dollarhide, 98 Mo. 198, 11 S. W. 611. In one case where a decree ordering a conveyance had by statute itself the operation of a conveyance, an opposite result was reached. Gower v. Quinlan, 40 Mich. 572. But clearly an injunction, directed simply at the defendant personally, can have no effect on his relation to the land, which is the only thing the Statute of Limitations is concerned with.

APPEAL AND ERROR NOMINAL DAMAGES-REFUSAL TO REVERSE. - The plaintiff sued for a libel actionable per se according to a statutory definition, alleging no special damage. The trial court sustained the defendant's demurrer to the declaration. The libel was of such a nature that no punitive damages were involved. Held, that, although the trial court erred in sustaining the demurrer, judgment be affirmed since only nominal damages are involved. Jones v. Register & Leader Co., 158 N. W. 571 (Iowa).

It is a well-established rule that the upper court will not reverse an erroneous judgment in order to allow nominal damages. Harwood v. Lee, 85 Iowa 622, 52 N. W. 521; Kelly v. Fahrney, 97 Fed. 176; East Moline Co. v. Weir Plow Co., 95 Fed. 250. But the dependence of costs upon a reversal makes an affirmance unjust. Moreover, there is a general exception to the stated rule if substantial rights are involved. Lewis v. Flint, etc. Ry. Co., 153 Mich. 638, 23 N. W. 469. See Heater v. Pearce, 59 Neb. 583, 587, 81 N. W. 615, 616. It has been so held, for example, in actions for trespass to determine title. Wing v. Seske, 109 N. W. 717 (Iowa); Harriss v. Sneeden, 104 N. C. 369, 10 S. E. 477. A similar decision was rendered in an action which, by establishing rights concerning a continuing nuisance, created an adjudication_binding for any later case which might arise. Harvey v. Mason City, etc. R. Co., 129 Iowa 465, 105 N. W. 958. In the principal case a substantial right might well be found in the interest of the plaintiff to have his reputation cleared by some sort of a decision in his favor. Nor would it be necessary to reverse judgment and remand the cause in order to protect the plaintiff. There is plenty of authority allowing the appellate court to render a final judgment itself. Roberts v. Corbin & Co., 28 Iowa 355; Yeoman v. Lasley, 40 Ohio St. 339. See Bernhardt v. Brown, 118 N. C. 700, 24 S. E. 715. And such procedure is not prevented by the Iowa code. See 1897 IOWA CODE, § 4139.

BROKERS WRONGFUL SALE OF STOCK - Right of CUSTOMER TO SIMILAR STOCK NOT ACQUIRED FOR THE PURPOSE OF RESTITUTION.- A stockbroker purchased on credit for the plaintiff 100 shares, and at different times for other customers 180 shares, of a certain stock. He subsequently disposed of all stock of this kind. Later he acquired 100 shares of the same kind of stock. These shares were neither acquired nor held on behalf of any particular stockholders.