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CONFLICT OF LAWS – RIGHTS AND OBLIGATIONS OF FOREIGN CORPORATIONS APPOINTMENT OF RECEIVER FOR LOCAL PROPERTY OF FOREIGN CORPORATION. — A New York corporation was doing business in Connecticut. A Connecticut court appointed a receiver for the assets located in that state. The plaintiff, a receiver appointed in New York, seeks to recover the assets, claiming that the Connecticut appointment was invalid. Held, that the plaintiff may not recover. Lowe v. R. P. K. Pressed Metal Co., 99 Atl. 1 (Conn.).
It is elementary that no court has jurisdiction to dissolve a foreign corporation. Merrick v. Van Santvoord, 34 N. Y. 208. But the appointment of a receiver does not dissolve a corporation. Indeed, in the absence of a statute, a court of equity, which is the court that appoints receivers, cannot dissolve even a domestic corporation. Elizabeth Gas Light Co. v. Green, 46 N.J. Eq. 118, 18 Atl. 844. Therefore in view of the plenary jurisdiction which a state has over all property in it, it seems clear that a receiver may be appointed to take charge of those assets of a foreign corporation which are within the state. Holbrook v. Ford, 153 Ill. 633, 643, 39 N. E. 1091, 1094; Shinney v. North American, etc. Co., 97 Fed. 9. Cf. In re Commercial Bank, 33 Ch. D. 174. One state court holds the contrary; but the decision is based on a local statute. Stafford v. American Mills Co., 13 R. I. 310. Moreover, even in that state it has been held that an ancillary receiver may be appointed. Evans v. Pease, 21 R. I. 187, 42 Atl. 506. Such an appointment raises practically the same question as to the jurisdiction of the appointing court; for an ancillary receiver is as much an officer of the court as an original one. Sands v. Greeley, 88 Fed. 130. The result of the principal case, therefore, seems clearly in accord with authority.
CONFLICT OF LAWS - WHETHER A SHAREHOLDER IN A CORPORATION IS BOUND BY THE LAWS OF THE STATE OF INCORPORATION OR OF THE STATE IN WHICH BUSINESS IS CONDUCTED. An Arizona corporation was formed under the laws of that state exempting stockholders from individual liability for corporate debts. The charter provided that business might be transacted in any other state or territory as the Board of Directors might direct. A suit is brought against the holder of some of the stock on a debt incurred in the prosecution of the corporate business in the state of California. The creditor relies on the provisions of the California Constitution and Code that every shareholder in a corporation is individually liable for such proportions of its debts, incurred while he was a shareholder, as the amount of his stock bears to the subscribed capital stock of the corporation. Const., Art. 12, $ 3; Civ. CODE, $ 322. The same liability attaches whether the corporation is foreign or domestic. CONST., Art. 12, $ 15; Civ. CODE, 8 322. Held, that the shareholder is liable. Provident Gold Mining Co. v. Haynes, 159 Pac. 155 (Cal.)
When an individual becomes a member of a corporation he manifestly contemplates that the corporation will conduct its affairs according to the laws of the power giving corporate existence. Hence he must, of necessity, consent to be bound by those laws. Therefore, as a general proposition, the law of the jurisdiction granting the charter regulates the liability of a shareholder. Flash v. Conn, 109 U. S. 371; Bernheimer v. Converse, 206 U. S. 516, 529; Hancock Nat. Bank v. Ellis, 172 Mass. 39, 51 N. E. 207; BEALE, FOREIGN CORPORATIONS, 8 445. For the same reason, if the corporation is specifically authorized to act in given jurisdictions, the shareholder binds himself according to their laws. Thomas v. Mathieson, 232 U. S. 221; Pinney v. Nelson, 183 U. S. 144, 151. But an English case has decided that assent, sufficient to bind the stockholder by the laws of the foreign jurisdiction, is given only when such jurisdiction is specifically designated, and that a general assent, to be particularized by the directors as in the principal case, is not capable of such effect. Risdon Iron & Locomotive Works v. Furness, (1905) 1 K. B. 304, affirmed (1906) 1 K. B. 49. Similarly cases hold that a married woman's liability on a
negotiable instrument is determined by the law of the jurisdiction in which it is negotiated only if special reference is made to the place of negotiation. Hauck v. Sharpe, 83 Mo. App. 385; Union Nat. Bank v. Chapman, 169 N. Y. 538, 62 N. E. 672. Whether this distinction is justified, namely, that a general assent to the laws of whatever jurisdictions others may determine is no assent to the jurisdictions finally settled upon, would seem to be a question of fact incapable of productive argument. It is probable that the stockholder was a resident of California. If so, it is obvious that the only limitation to the effectiveness of California's laws over him would be the federal and its own constitutions, and the case would be clear. MINOR, CONFLICT OF Laws, $ 2, III. But the court's opinion neither proceeded upon this ground nor stated the facts necessary for it.
CONSTITUTIONAL LAW PERSONAL RIGHTS — IMPRISONMENT FOR DEBT — VALIDITY OF ORDINANCE MAKING DEBT A CRIME. A city ordinance made it a misdemeanor to refuse to pay taxicab hire. The defendant was charged with a violation of the ordinance. He sets up the prohibition in the state constitution against imprisonment for debt. Held, that the ordinance was unconstitutional. Kansas City v. Pengilley, 189 S. W. 380 (Mo.).
Failure to pay the fine for a misdemeanor results in imprisonment under the law of Missouri. But while the imprisonment is directly predicated on the misdemeanor and the fine, this is but an indirect method of imprisonment for debt. See Lamar v. State, 120 Ga. 312, 47 S. E. 958; Ex parte Milecke, 52 Wash. 312, 100 Pac. 743, 744. Cf. United States v. Reynolds, 235 U. S. 133. It is true that not all debts are within the meaning of the constitution. Thus, taxes are not included. Rosenbloom v. State, 64 Neb. 342, 89 N. W. 1053. Nor are judgment debts in tort actions. Ex parte Berry, 85 S. C. 243, 67 S. E. 225. Contra, Bronson v. Syverson, 88 Wash. 264, 152 Pac. 1039. But debts arising out of contract must clearly fall within the immunity. And so the principal case is supported by the weight of authority. Ex parte Crane, 26 Cal. App. 22, 145 Pac. 733; State v. Paint Rock Coal & Coke Co., 92 Tenn. 83, 20 S. W. 499. Contra, Bray v. State, 140 Ala. 172, 37 So. 250. Undoubtedly the purpose of the statute was to prevent fraud, but its language was by no means so limited. It is of course obvious that the state may punish fraud even though arising out of contract. Ex parte Milecke, supra; State v. Yardley, 95 Tenn. 548, 32 S. W. 481. But see Carr v. State, 106 Ala. 35, 17 So. 350. For fraud is a distinct injury to the state. The present universality of the crime of obtaining goods or money under false pretenses makes the step easy. But one state has likewise allowed imprisonment, in spite of a constitutional provision, for failure to pay a debt when the ability to pay existed. Ex parte Clark, 20 N. J. L. 648. It seems extremely doubtful whether stubbornness in refusing to pay a debt can possibly be classed as an injury to the state distinct from the failure in general of paying one's debts. It may be that the statute in question can be supported on the grounds of police power. An Alabama case, dealing with licensed vehicles, has so held. Bray v. State, supra. Whether such holding is correct must depend on the view of the court of the necessity for the public welfare of the statute in question. Cf. State v. Missouri Pacific R. Co., 242 Mo. 356, 147 S. W. 118.
CONSTITUTIONAL LAW - POWER ADMINISTRATIVE COMMISSION TO DECLARE A STATUTE UNCONSTITUTIONAL. - A statute passed by the Philippine legislature required certain steamship lines to carry mail free of charge. A complaint was filed with the Philippine Public Utility Commission setting forth the defendant's refusal to comply. The defense was the unconstitutionality of the statute. Held, that the Commission had no power to consider the question of the constitutionality of the statute. Director of Posts v. Inchausti Eso Co., P. U. R. 1916 E, 849.
For a discussion of the principles involved, see NOTES, P. 386.
CONSTITUTIONAL LAW - SEPARATION OF POWERS — POWER OF THE HOUSE OF REPRESENTATIVES TO PUNISH FOR CONTEMPT. Charges of misconduct, preferred against a United States District Attorney, had been referred by the House to the Committee on the Judiciary. That body proceeded to examine into the truth of the charges. During the pendency of the examination, the accused published in the newspapers a signed letter severely criticising the committee's actions and impugning the honesty of their motives. Upon a vote of the House, the Speaker caused his arrest for contempt, whereupon the District Attorney applied for a writ of habeas corpus. Held, that he be remanded to custody. U. S. ex rel. Marshall v. Gordon, 235 Fed. 422 (U. S. Dist. Ct., S. D., N. Y.).
For a discussion of this case, see Notes, p. 384.
CORPORATIONS STOCKHOLDERS · INDIVIDUAL LIABILITY TO CORPORATION AND CREDITORS PROTECTION FROM CREDITOR BY NO RECOURSE CLAUSE.
- A stockholder in a Missouri corporation paid for his stock with overvalued property. A statute required payment of full value. The corporation being insolvent, one of its bondholders seeks to recover from the stockholder on his statutory liability. The stockholder sets up an agreement incorporated by reference into the bond, providing that the creditor should have no recourse against a stockholder. Held, this was a good defense. Babbitt v. Read, 236
There are three possible theories as to the nature of the statutory liability of a stockholder who has paid for his stock with overvalued property. HARV. L. REV. 854. Of these the “trust fund” theory is historically the first. It, however, has never been applied so as to impose an actual trust upon the corporation in favor of its creditors. See Graham v. Railroad Co., 102 U. S. 148, 160. Wabash, etc. Ry. Co. v. Ham, 114 U. S. 587, 594. In reality, in its application it differs from the second or third theories, according as it is conceived to grant recovery to all creditors or only to those without notice, in nothing but its terminology and the vagueness of the principle applied. Under the second theory the corporation's release of the stockholder from his obligation to pay the full par value of his stock is rendered void by the statute. The creditor's right is then to enforce the stockholder's liability as an equitable asset. By contracting not to hold the stockholder liable, he is simply cutting himself off from reaching certain assets of the corporation. There is no reason of policy for questioning the validity of this limitation. French v. Teschemaker, 24 Cal. 518. Thus a creditor's contract to go only against partnership assets, leaving untouched the partners' individual liability, is upheld. See LINDLEY, PARTNERSHIP, 8 ed., 244. The third theory is based upon the so-called "holding out” idea. This seems to be the ground of the Missouri decisions. Colonial Trust Co. v. McMillan, 188 Mo. 547, 567, 87 S. W. 933, 939. Under this view a corporation bargaining for the exemption of its stockholders is in the position of one deceiver stipulating for the immunity of a joint tortfeasor. But where, as part of a scheme to defraud, a clause in a contract is inserted to exempt a party from the consequences of his fraud, that waiver, being itself based upon fraud, may be set aside. Bridger v. Goldsmith, 143 N. Y. 424, 38 N. E. 458. See 21 HARV. L. REV. 218. Though if the party proposing the exemption, being innocent, wishes merely to protect himself from inadvertent statements or omissions, as where a statute requires him to publish certain facts in a prospectus, such a clause has been upheld. Macleay v. Tait, (1906) A. C. 24, 27, 34. In the principal case there was no evidence of an intent fraudulent in fact on the part of the corporation. Cf. Babbitt v. Read, 215 Fed. 395, 418. Since, however, under the "holding out” theory the statute declares that the doing of certain prohibited acts shall be equivalent to the making of misrepresentations such as ground an action for deceit, it might well be argued that by analogy the
exemption clause, when itself part of the scheme to issue fully paid-up stock for overvalued property, should be void. Another difficulty with the defense arises from the fact that, the creditor's right against the stockholder being direct, the stockholder is availing himself as beneficiary of a defense created for him by a contract to which he was a stranger. Neither of these objections to the defense, however, seems insuperable. As a matter of authority the validity of a stockholder's exemption clause has been unanimously sustained, without, however, any attempt to differentiate as to possible bases of the liability. Brown v. Eastern Slate Co., 134 Mass. 590; Basshor & Co. v. Forbes, 36 Md. 154; Bush v. Robinson, 95 Ky. 492, 26 S. W. 178; Grady v. Graham, 64 Wash. 436, 116 Pac. 1098. But cf. Kreisser v. Ashtabula Gas Light Co., 24 Ohio Cir.
Ct. R. 313
CRIMINAL LAW – SUSPENSION OF SENTENCE. A prisoner was convicted in a District Court of the United States for embezzlement in violation of section 5209 REVISED STATUTES, and sentenced to imprisonment for five years, the minimum provided for by the statute. The judge, then, over the objection of the United States District Attorney, ordered the suspension of execution of the sentence, during the good behavior of the prisoner, and extended the term of the court for five years. The United States seeks from the Supreme Court a writ of mandamus, directing the judge to vacate the order. Held, that mandamus should issue. Ex parte United States, Petitioner, U. S. Sup. Ct., Oct. Term, 1915, No. 11 original.
For a discussion of this case, see Notes, P. 369.
DEATH BY WRONGFUL ACT STATUTORY LIABILITY IN GENERAL — ADDITIONAL LIABILITY FOR INJURY CAUSING DEATH. Section of the Federal Employers' Liability Act provides that where the employee of an interstate carrier is negligently killed, his representative may recover for the benefit of the next of kin. U. S. COMP. STAT. 1913, § 8657. Section 9 provides that where an employee is injured, his right of action shall survive to his representative for the benefit of the next of kin. U. S. COMP. STAT., § 8665. An employee of an interstate carrier was injured, and, after having lived ten minutes in an unconscious condition, died from the injury. His representative seeks to recover under both statutes. Held, that he may recover only under the death statute. Great Northern Ry. Co. v. Capital Trust Co., U. S. Sup. Ct., Oct. Term, 1916,
Many states have statutes similar to those in the principal case. See TIFFANY, DEATH BY WRONGFUL ACT, 2 ed., § 26. Most courts hold that there may be a recovery under the survival statutes, even if death results from the injury. Missouri, etc. Ry. Co. v. Bennett, 5 Kan. App. 231; Brown v. Chicago, etc. Ry. Co., 102 Wis. 137, 77 N. W. 748. Contra, Merrihew v. Chicago, etc. Ry. Co., 92 III. App. 346; Lubrano v. Atlantic Mills, 19 R. I. 129, 32 Atl. 205. And a majority of the states allow recovery under the death acts, although death is not immediate. Brown v. Buffalo, etc. R. Co., 22 N. Y. 191. See Roach v. Imperial Mining Co., 7 Fed. 698, 704. Contra, Sawyer v. Perry, 88 Me. 42, 33 Atl. 660; Dolson v. Lake Shore, etc. Ry. Co., 128 Mich. 444, 87 N. W.629. It would follow that the facts may be such as to satisfy both statutes. The theories of the two actions are entirely different. See 15 HARV. L. Rev. 854. Consequently most jurisdictions permit a recovery under both, where the facts permit it. Leggott v. Great Northern Ry. Co., I Q. B. D. 599; Mahoning Valley Ry. Co. v. Van Alstine, 77 Ohio St. 395, 83 N. E. 601. See Stewart v. United Electric Light & Power Co., 104 Md. 332, 344, 65 Atl. 49, 54; Murphy v. St. Louis, etc. R. Co., 92 Ark. 159, 163, 122 S. W. 636, 638. Contra, Sweetland v. Chicago, etc. R. Co., 117 Mich. 329, 75 N. W. 1066. It would seem to be immaterial that the same person may receive the benefit of both actions. But, where the death
from an injury is instantaneous, no action for the injury survives. Illinois, etc. R. Co. v. Pendergrass, 69 Miss. 425, 12 So. 954; Dillon v. Great Northern Ry. Co., 38 Mont. 485, 100 Þac. 960. See Hansford v. Payne, 11 Bush (Ky.) 380, 385. But cf. Murphy v. New York, etc. R. Co., 30 Conn. 184; Worden v. Humeston, etc. R. C04 72 Iowa 201, 33 N. W. 629. Nor is there a survival, if there was conscious suffering which was substantially contemporaneous with death. The Corsair, 145 U. S. 335, 348. It is said that the deceased never suffered damage substantial enough to give him a cause of action which could survive. It would seem to follow, as the principal case holds, that no action survives in cases where the decedent lived for a time, but was never conscious. See St. Louis, etc. Ry. v. Craft, 237 U. S. 648, 655. But the weight of authority takes a contrary view. Bancroft v. Boston, etc. Ř. Co., 93 Mass. 34; Olivier v. Houghton, etc. Ry., 134 Mich. 367, 96 N. W. 434.
EQUITY — JURISDICTION · POLITICAL RIGHTS; INJUNCTION TO PROTECT.
One Gilmore, a Democrat, is candidate for Railroad Commissioner. The State Democratic Committee is about to nominate one Hurdleston for the office. TEXAS REV. STAT. 1911, 8 3173, forbids the state committee of a party to nominate candidates. TEXAS REV. STAT. 1911, $ 3143, authorizes a mandamus to enforce the prior statute; and TEXAS Rev. CR. STAT. 1911, $ 226, makes its violation criminal. Gilmore seeks to enjoin the committee from making the nomination. Held, that an injunction will issue. Gilmore v. Waples, 188 S. W. 1037
Although all political rights are considered legal rights, yet between purely political rights and civil rights the courts draw a distinction. The overwhelming weight of judicial authority is to the effect that courts of equity will not protect those political rights which do not involve civil rights. Fletcher v. Tuttle, 151 Ill. 41, 37 N. E. 683; Kearns v. Howley, 188 Pa. 116, 41 Atl. 273; Green v. Mills, 69 Fed. 852; State v. Aloe, 152 Mo. 466, 54 S. W. 494; Winnett v. Adams, 71 Neb. 817, 99 N. W. 681. See 5 Pom. EQ., 3 ed., 88 331, 332; KERR, INJUNCTION, 4 ed., 8. Most of these cases proceed on the ground that there has been no tort at law, a position perhaps open to some doubt. See Pound, “Equitable Relief against Injuries to Personality,” 29 HARV. L. Rev. 640, 681; 30 Harv. L. Rev. 172, 174. However that may be, it must be clear that the use of an equitable remedy in a case like the present, where the appeal is from a party body and the injunction runs to them, involves practical difficulties very serious in character. Policy leaves the redress of this class of wrongs to the voters. See Winnett v. Adams, 71 Neb. 817, 825, 99 N. W. 681, 684. The statutory remedy by mandamus, too, seems as sufficient as it is convenient. And if it was a sound principle of equity before the statute passed that political rights would not be protected, it must be so still, for most political rights are “legal” rights whether or not they are recognized by statute. The distinction is between political and civil, not political and legal, rights.
EVIDENCE – HEARSAY — EVIDENCE OF INTERPRETATION OF OPPONENT'S DECLARATIONS. – In an action for personal injuries, the defendant set up a release by the plaintiff. The plaintiff, a Pole, seeks to show that he signed this without knowledge of its nature. It was proved that the defendant's agent, when securing the plaintiff's signature, had used a bystander as an interpreter. The defendant offers the testimony of the agent as to what, during the interview, the interpreter had told him that the plaintiff said. Held, that this is admissible. Grocz v. Delaware & Hudson Co., 161 N. Y. Supp. 117.
In conformity to the rule against hearsay, a participant in a conversation carried on through an interpreter may not generally testify to the interpretation of what was said by the other speaker. State v. Noyes, 36 Conn. 80. But it is well settled that such evidence may be introduced by one party to the suit