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means, to present any defense that the law of the land permits.” See also SHARSWOOD, PROFESSIONAL ETHICS, 5. ed., 90–92. This, of course, does not justify any positive obstruction of justice. In re Billington, 156 App. Div. 63, 141 N. Y. Supp. 16; In re Lane, 93 Minn. 425, 101 N. W. 613. Generally, it is the duty of a lawyer to divulge the truth, even though this should be damaging to his client. People v. Beattie, 137 Ill
. 553, 27 N. E. 1096; In re Schapiro, 144 App. Div. I, 128 N. Y. Supp. 852. See KINKEAD, JURISPRUDENCE, LAW, AND ETHICS, 329. But see WARVELLE, ETHICS, $ 170. Just how far this rule applies in a criminal case, is a difficult question. There is certainly no duty to disclose a confession. See Courvoisier's Case, Appendix to SHARSWOOD, PROFESSIONAL ETHICS, 5 ed., 183. But an attorney who knowingly adopts false testimony as true, perpetrates a fraud upon the court, and this would seem to be improper, even in a criminal case. Some courts have attempted to establish definite rules, as to what conduct will justify disbarment. In re Cahill, 66 N. J. L. 527, 50 Atl. 119. Clearly, it is not necessary that the lawyer shall have committed a crime. In re Hardenbrook, 135 App. Div. 634, 121 N. Y. Supp. 250. Tested by precedent, the punishment in the principal case seems unusually severe. In re Newman, 158 App. Div. 471, 143 N. Y. Supp. 590. Cf. In re Cahill, supra. But precedent is of little value on such a question. The punishment to be given should depend upon the particular facts of each case, and must rest largely in the discretion of the court. See In re Atlorney, 10 App. Div. 491, 513, 42 N. Y. Supp. 268, 282.
BANKRUPTCY DISCHARGE - DEBTS NOT AFFECTED WILFUL AND MALICIOUS INJURY TO PROPERTY. - A broker held stock of a customer as security for the latter's indebtedness. The broker wrongfully sold the stock and appropriated the proceeds. Later he was adjudicated bankrupt and received a discharge. The customer sues for the conversion, claiming that it was a wilful and malicious injury to his property and hence was not discharged. Held, that the customer may recover. McIntyre v. Kavanaugh, 242 U. S. 138.
The present Bankruptcy Act includes among the debts not barred by a discharge those created by a misappropriation while acting in a fiduciary capacity. BANKRUPTCY ACT,, § 17 a (4). The Acts of 1841 and 1867 also contained this provision. It was held under the Act of 1841 that “fiduciary” meant express trust and that therefore a principal's claim against his factor was not discharged. Chapman v. Forsyth, 2 How. (U. S.) 202. Similarly, under the Act of 1867 brokers as well as factors and commission merchants were considered not to be fiduciaries. Hennequin v. Clews, 111 U. S. 676. Accordingly, when the present Act went into effect the courts felt bound to follow the established course of decisions on this point, and hold that a broker was not discharged under $ 170 (4). Crawford v. Burke, 195 U. S. 176, 189. However, the present Act denies a discharge also of liabilities for wilful and malicious injuries to property. BANKRUPTCY Act, $ 17 a (2). The attitude of the courts under 17 a (4) had been one of tenderness toward the bankrupt, as is evidenced by the decisions just alluded to. The lower federal courts, following the same policy under § 17 a (2), decided that a conversion was not a “wilful and malicious” injury. Matter of Ennis & Stoppani, 171 Fed. 755. The state courts, however, seemed to take the opposite view. Kavanaugh v. McIntyre, 210 N. Y. 175, 104 N. E. 135; Hallagan v. Dowell, 139 N. W. 883 (Iowa). See COLLIER, BANKRUPTCY, 10 ed., the Supreme Court several years ago decided that “malicious” does not connote any evil motive toward the injured party. Tinker v. Colwell, 193 U. S. 473, 485. That decision paved the way for the holding in the principal case that the conversion by the broker was a malicious injury to property. This construction not only shows a much stricter attitude toward the bankrupt, but also goes so far as to be questionable, for the requirement of malice would ordinarily not be found in the unjustifiable appropriation of the property of another and
would require actual ill will toward the person injured. Matter of Ennis & Stoppani, supra. The actual decision in the principal case, however, seems desirable; and the liberal construction of 17 a (2) may perhaps be justified as being necessary to counteract the results of too strict a construction of 172 (4).
BANKRUPTCY PREFERENCES — JUDGMENT, LEVY AND SALE WITHIN FOUR MONTHS OF BANKRUPTCY. — A creditor with reasonable cause to believe the debtor insolvent procured a judgment against him, levied execution and received the proceeds of the execution sale, all the steps occurring within four months of the filing of the petition in bankruptcy. The trustee in bankruptcy sued the creditor for the amount realized from the sale. Held, that the trustee may recover. Anderson v. Stayton State Bank, 38 Am. B. Rep. 4.
For a discussion of the principles involved, see Notes, p. 619.
PREFERENCE RETURN BY BROKER TO CUSTOMER OF STOCK REDEEMED FROM A PLEDGEE. A customer loaned stock to his broker with authority to pledge. The broker did pledge for his own purposes and within four months of bankruptcy and while insolvent used his own funds to redeem the stock and returned it to the customer. The trustee in bankruptcy of the broker claimed that the transaction was preferential. Held, that no preference was effected. Robinson v. Roe, 233 Fed. 936 (C. C. A., 2nd Circ.).
The court bases its decision on the ground that the customer was merely reacquiring property to which he always had an exclusive property right. If this were the fact, of course he received no preference; but by authorizing the broker to pledge, his interest became encumbered to the extent of the pledgee's claim. Now if the customer was a creditor when the stock was redeemed and returned to him, he has received a preference. BANKRUPTCY Act, $ 60 0. A creditor is defined as one owning a claim provable in bankruptcy. BANKRUPTCY Act, § 1, sub-sec. 9. Although tort claims are not ordinarily provable, the victim of a conversion of personal property may waive the tort and prove on the theory of implied contract. Crawford v. Burke, 195 U. S. 176. Hence, if the broker had been guilty of a conversion of the stock, the customer would have had a provable claim and satisfaction thereof by a redemption, and return of the converted stock would be preferential. But there has been no conversion in the principal case inasmuch as there was no unqualified demand for a return. However, even if there was no present obligation to redeem and return the stock, there was at least a contingent claim on the part of the customer, contractual in its nature, and becoming absolute on the customer's election to require his property. If this claim is provable, its satisfaction is preferential. It has been decided that on the bankruptcy of the principal, a surety has a provable claim even before he has in any way discharged the debt. Williams v. U. S. Fidelity and Guaranty Co., 236 U. S. 549. And quite recently the Supreme Court has held that a party to a bilateral contract, still largely executory, may prove for the value of the entire contract against the estate of the other contracting party. Central Trust Co. v. Chicago Auditorium Ass'n, 240 U. S. 581. But see In Re Imperial Brewing Co., 143 Fed. 579. Hence it is submitted that the necessary elements of a preference are present in the case under discussion. Furthermore it seems immaterial whether the customer loans property to the broker to be pledged, as here, or whether the original transaction was a pledge with power to repledge. It has been decided by the Supreme Court that a pledgor who takes back stock under circumstances identical with those of the principal case does not receive a preference. Richardson v. Shaw, 209 U. S. 365. The same reasons rendering the case under discussion open to criticism apply likewise to such a case.
BANKRUPTCY — PROPERTY PASSING TO THE TRUSTEE — LIFE INSURANCE POLICIES: IN GENERAL. One Samuels had insured his life in favor of a third person, reserving power to change the beneficiary. The policy had a cash surrender value. After the bankruptcy of the insured, his trustee sought to recover the policy or its value. Held, that he may not recover either. Matter of Samuels, 237 Fed. 796 (Circ. Ct. of App., and Circ.).
Section 70 a (5) of the Bankruptcy Act gives to the trustee the property which the bankrupt could have transferred, provided that when the bankrupt has an insurance policy with a surrender value “payable to himself,” he may retain the policy, if he pays the surrender value to the trustee, and otherwise the policy passes to the trustee. The construction of this clause might have been that all policies payable to the bankrupt or in which he had the right to change beneficiaries should be considered property which he might have transferred, and that the policies should therefore pass to the trustee, unless they were such as were redeemable and redeemed under the proviso. In re Orear, 178 Fed. 632; In re Dolan, 182 Fed. 949. See 1 REMINGTON, BANKRUPTCY, 2 ed., $$ 1002, 1009. But as to policies payable to the bankrupt, the Supreme Court has held that they remain the property of the bankrupt and that only the surrender values of those policies which have surrender values pass to the trustee. Burlington v. Crouse, 228 U. S. 459. The basis of this decision seems to be that no interest in an insurance policy is intended to pass under $ 70 a (5) unless it comes within the proviso. It might seem to follow that a policy payable to a third person in which the bankrupt could change the beneficiaries is not “payable to the bankrupt” and that consequently its surrender value would not pass under $ 70 a (5). See 1 REMINGTON, BANKRUPTCY, 2 ed., § 1009. But this would seem to be unduly narrowing an already narrow construction; for, since the bankrupt could make himself beneficiary, the policy is in substance payable to the bankrupt. He should, therefore, get the surrender value under $ 70 a (5). The same result, it would seem, might be reached under $ 70 a (3). This gives to the trustee powers which the bankrupt might have exercised for his own benefit. And the right to change beneficiaries certainly seems to be such a power. Possibly, however, it may be held that no interest in an insurance policy can pass under any part of the Act except the proviso of 70 a (5). Cf. Burlington v. Crouse, 228 U. S. 459, 472. But the Act seems to give little support to such a construction.
CARRIERS — LIMITATION OF LIABILITY - LIMITATION OF LIABILITY BY AGREED VALUATION. — The defendant, a common carrier, accepted a shipment of goods from the plaintiff of the value of two thousand dollars. The goods being lost, the shipper brings suit alleging that the goods were converted by the servants of the carrier to their own use. The defendant set up the affirmative defense that the contract of shipment valued the goods at fifty dollars and limited the liability of the carrier to that amount. The plaintiff demurred. Held, that the contractual limitation is binding and the demurrer should be overruled. D’Utassy v. Barrett, 56 N. Y. L. J. 1367 (N. Y. Ct. of App.).
In England a common carrier may, by contract, completely exempt itself from liability for loss of goods. Nicholson v. Willan, 5 East 507. Feeling the danger that the carrier might overreach the shipper, Parliament has provided that the contract must be just and reasonable. Manchester, etc. Ry. v. Brown, 8 App. Cas. 703. The American courts have, with a single exception, declared that contracts totally exempting carriers from liability for their own negligence are void as against public policy. Railroad Co. v. Lockwood, 17 Wall. (U. S.) 357; School District v. Boston, etc. Ry. Co., 102 Mass. 552; contra, Nelson v. Hudson River R. Co., 48 N. Y. 498. As to the possibility of contracting for a limited liability in return for a reduction in rates, American courts are divided. To some courts it seems impossible to limit a liability which, on grounds of policy, cannot completely be avoided. U. S. Express Co. v. Backman, 28 Ohio St. 144; Black v. Goodrich Transportation Co., 55 Wis. 319; Moulton v. St. Paul, etc. Ry. Co., 31 Minn. 85. To other courts the business sense of allowing a shipper to get less by paying less caused them to hold valid the limitation of liability to an agreed value. Graves v. Lake Shore, etc. Ry. Co., 137 Mass. 33; Oppenheimer & Co. v. U. S. Express Co., 69 Ill. 62. See H. E. Willis, “The Right of Bailees to contract against Liability for Negligence,” 20 HARV. L. REV. 297, 306. The Federal Supreme Court has, however, held the limitation of liability contracts to be good and, moreover, made the rule the universal one under the Carmack Amendment, so far as loss by negligence is concerned. Adams Express Co. v. Croninger, 226 U. S. 491; Boston & Maine Ry. Co. v. Hooker, 233 U. S. 97. Granting that the limitation is valid as applied to negligent acts of the carrier's servants it would not be expedient to differentiate the case where the servant's conduct is made worse only by adding a mens rea. But see The New England, 110 Fed. 415, 420; Southern Express Co. v. Gutman, 6 Ky.L. R. 587.
CHOSES IN ACTION – PARTIAL ASSIGNMENT - WHETHER JUDGMENT IN FAVOR OF PARTIAL ASSIGNEE BARS ASSIGNOR. - An unlawfully discharged employee had an unliquidated claim for damages against his employer. The employee assigned such damages as should accrue up to a certain date, and reserved after-accruing damages. The assignee sued the employer in the municipal court and recovered. The assignor now sues the employer at law for the balance of the claim, and the employer pleads in bar the prior judgment recovered by the assignee. Held, that the assignor may recover. Carvill v. Mirror Films, Inc., 56 N. Y. L. J. 1861 (App. Div.).
At common law, a partial assignee had standing only in equity. See James v. Newton, 142 Mass. 366, 8 N. E. 122. Nor have modern codes enabling an assignee to sue at law in his own name generally been extended to partial assignees. In re Stiger, 202 Fed. 791. But cf. Skipper v. Holloway, (1910) 2 K. B. 630; Caledonia Ins. Co. v. Northern Pacific Ry. Co., 32 Mont. 46, 79 Pac. 544; Gaugler v. Chicago, etc. Ry. Co., 197 Fed. 79. In New York, however, the law has undergone an independent development, and seems still unsettled. It has been said, on the one hand, that the only remedy was equitable. Chambers v. Lancaster, 160 N. Y. 342, 348, 54 N. E. 707, 708; King v. King, 73 App. Div. 547, 77 N. Y. Supp. 40; Thompson v. Gimbal Bros., 71 Misc. 126, 128 N. Y. Supp. 210. Earlier decisions, however, not expressly overruled, allowed the assignee a legal action. Morton v. Naylor, 1 Hill 583; Risley v. Phenix Bank, etc., 83 N. Y. 318, 329; Chase v. Deering, 104 App. Div. 192, 93 N. Y. Supp. 434. A middle position is to the effect that the assignee may sue at law by joining the assignor as co-plaintiff, and non-joinder is demurrable. Dickinson v. Tyson, 125 App. Div. 735, 110 N. Y. Supp. 269. On practical grounds this latter doctrine appears the most advantageous. Legal enforcement runs afoul of difficulties of procedure or of policy. Only joint obligees could sue jointly at common law, and a partial assignee was not a joint obligee. If separate actions were allowed, the debtor would be subjected to undue litigation, or else a judgment recovered by an assignee would bar the assignor and other assignees. Yet if the right is purely equitable, the claim is pro tanto withdrawn from jury trial, and a later total assignment might arguably cut the assignee off. See Williston, “Is the Right of Assignee of a Chose in Action Legal or Equitable?", 30 Harv. L. REV. 97, 104. It is best, therefore, to treat the right as legalequitable, the assignor and assignee being equitable tenants in common, and the assignor being legal owner of the share assigned, subject, however, to a legal “power" in the assignee, upon notice to the debtor. See Cook, "Alienability of Choses in Action,” 30 Harv. L. REV. 449, 482; Cook, “Alienability of Choses in Action,” 29 HARV. L. Rev. 816, 820. The liberal tendency to allow joinder of parties whose rights are not technically joint, is instanced also by the joinder at law of tenants-in-common, and co-owners of other separate interests in land. Cf. School Districts v. Edwards, 46 Wis. 150,
49 N. W. 968; Watson v. Milwaukee, etc. Ry. Co., 57 Wis. 332, 15 N. W. 468. If, as in the principal case, the debtor fails to demur for non-joinder of the assignor, a waiver of his rights against a splitting of the cause of action may well be implied, and hence the assignee's judgment should not bar later actions.
DAMAGES — LIQUIDATED DAMAGES WHETHER DEMURRAGE RATE APPLIES TO UNREASONABLE DELAY. — The defendant was a charterer of a ship under a charter party which provided five lay days for loading, with payment of demurrage at a fixed rate per day after that. After detention of the ship for a reasonable time beyond the lay days plaintiff gave defendant notice that he would no longer accept the demurrage rate, but would hold the defendant for actual damages. The defendant declined to agree to this. The boat was retained some time longer, for which detention plaintiff seeks to recover actual damages. Held, that the plaintiff may recover only the demurrage rate. Inverkip Steamship Co. v. Bunze, (1917) 1 K. B. 31.
Demurrage may be considered either as an optional right in the charterer to retain the ship on paying a certain sum therefor, or as liquidated damages for a breach of the contract. If the first view be taken the option must be regarded as lasting only a reasonable time, and when the option expires, of course the provision for payment would end, and any further detention would be a breach for which actual damages could be recovered. Western Transport Co. v. Barley, 56 N. Y. 544. See Lilly & Co. v. Stevenson & Co., 22 R. 278, 286. See CARVER, CARRIAGE OF GOODS BY SEA, 3 ed., $ 609; STEVENS, DEMURRAGE, 69. This result has the advantage that it does not force the shipowner to either leave the boat for an indefinite period, and recover only a fraction of the actual damages, or take the boat away and suffer perhaps much greater damage for which he must rely on his action against the charterer. But the true construction of the contract in the principal case seems to be that the contract is to load the ship during the lay days, and pay damages at a liquidated rate for further detention; the unqualified statement “demurrage at so much per day" seems to indicate clearly that that rate of damages was relied on so long as the contract should remain in force. Western Steamship Co. v. Amaral Sutherland Co., (1913) 3 K. B. 366. See SCRUTTON, CHARTERPARTIES AND BILLS OF LADING, 6 ed., art. 128. Had the defendant merely continued to use the boat after notice by the plaintiff he might be held to have impliedly consented to pay the actual damage, but his refusal to agree forbids such a construction of his actions. Hagan v. Tucker, 118 Fed. 731. See Wald's POLLOCK ON CONTRACTS, 3 ed., 9.
DESCENT AND DISTRIBUTION -HOMICIDE BY INSANE HEIR. — An infant who had inherited real and personal property was killed by her insane mother, who then committed suicide. The child's property is claimed by both the mother's heirs and those who would be the child's heirs were the mother disqualified. Held, that the property became vested in the mother and passed to her heirs. Re Estate of Maude Mason, 31 Dom. L. R. 305 (Br. Col.).
For a discussion of the principles involved in this case, see Notes, p. 622.
DOWER — VOID DIVORCE - ESTOPPEL IN PAIS — EFFECT OF IGNORANCE OF ONE'S RIGHTS. Plaintiff secured a rabbinical divorce from R., and both parties, believing the divorce valid, “married” again. Plaintiff had knowledge of R.'s “remarriage.” Plaintiff then removed from New York to Kansas. Twenty years after the separation, shortly after R.'s death, plaintiff learned that the divorce was invalid. She now claims dower in land acquired by R. and conveyed to an innocent purchaser in the interval. Held, she is equitably estopped from asserting her legal right to dower. Kantor v. Cohn, 56 N. Y. L. J. 1339 (Sup. Ct., King's Cty.).
Some courts have held that where the right of dower is statutory it can be barred only in such manner as the statute expressly provides. McCreery v.