Central Law Journal.

ST. LOUIS, MO., MAY 7, 1897.

On page 388 of this issue will be found a compilation of authorities on a constitutional subject of growing modern interest, viz., the nature of the majority required in favor of questions submitted to a popular vote. The annotation appears in connection with the recent Idaho case of Green v. State Board of Canvassers, wherein it was held that under the provisions of the constitution, providing for the amendment thereof where a majority of the electors voting upon that question vote in favor of the amendment, the same is ratified although the votes thus cast are not a majority of the votes cast at the general election for State officers. A later decision on the subject, not included in the annotation, is Citizens of De Soto Parish v. Williams, 21 South. Rep. 647, wherein the Supreme Court of Louisiana decides that what is meant by the phrase "by a vote of the majority of the property tax payers in numbers and in value" occurring in the constitution is a majority of the property taxpayers actually present and voting at an election, and that all qualified property taxpayers who absent themselves from an election duly called are presumed to assent to the expressed will of the majority of those voting, unless the law providing for the election otherwise declares.

It is alleged to be the doctrine of the common law and at least has been held in England since the days of Coke, though not unbrokenly nor without now and then hostile criticism from bench and bar, that an agreement by a creditor with his debtor to accept a smaller sum of money in satisfaction of an ascertained debt of a greater sum is without consideration and is not binding upon the creditor, even though he has received the smaller sum agreed upon in the new contract. And in the United States, blindly following what was supposed to be the settled law in England for years, our courts have uniformly announced adherence to this rule. The Supreme Court of Mississippi in the case of Clayton v. Clark, has recently struggled with the question and has boldly

dissented from the proposition so long upheld, in an opinion full of vigor and logical reasoning. They hold in terms that the acceptance by the payee of a note of a less sum in payment than that actually due under the terms of the note, on the distinct agreement that such payment shall extinguish the debt evidenced by the note, operates to satisfy the note and discharge the debtor. The contrary rule is, in nearly all the cases declared to have been first announced in Pinnel's Case, 5 Coke, 117a, whereas an examination of that case, as the Mississippi court shows, does not seem to justify such an interpretation. Pinnel's plea was that before the maturity of his bond for the larger sum plaintiff had accepted the lesser sum agreed upon between the parties in full satisfaction of the original debt. Now, all the authorities, American and English, including Coke himself, agree that this was a good defense, and that the plaintiff was bound by it, if defendant should properly plead it to a suit for the entire original debt. But the hapless Pinnel, in that remote period when courts were almost as jealous for the observance of technical rules of special pleading as for the execution of justice according to right, was adjudged to pay the whole debt, the plaintiff having judgment against him because of his "insufficient" pleading; "for," says Coke, "he did not plead that he had paid the £5. 2s. 2d. in full satisfaction (as by law he ought), but pleaded the payment of part generally; and that the plaintiff accepted it in full satisfaction." "However amusing and absurd," says the Supreme Court of Mississippi "this may appear to us, it was the point decided in Pinnel's Case; and the question before us was not only not decided, but it was impossible that it should have been. There Pinnel pleaded payment of the lesser sum before the date of the maturity of the greater sum named in the bond, and its acceptance by his creditor, in full satisfaction; and he lost, unhappy wretch that he was, born two or three centuries too soon, and not knowing the difference betwixt legal tweedle-dum and legal tweedle-dee, because he pleaded that he paid a part of the greater original sum, and that the plaintiff accepted it in full satisfaction, and did not plead that he paid it in full satisfaction. The rule is found in Pinnel's Case, but it is bold

In the case of Rigg v. Schweitzer, affirmed in 170 Pa. St, 549, 33 Atl. Rep. 116, we had occasion to review the law with regard to fraud in bidding, and the authorities are cited therein. I specially refer to Yerkes v. Wilson, *81 Pa. St. 10, where it was held that the employment of puffers by owners to bid up property selling at auction with a view of raising the price on bona fide bidders is a fraud upon them, and will avoid the sale at the option of the purchaser, and in the trial of such questions of fraud every circumstance or fact from which a legal inference of fraud may be drawn is evidence; that a reservation in conditions of a public sale to the owners of an open bid for themselves is proper, but, the owner having made a secret bid, the sale was set aside. The case of Bexwell v. Christie, Cowp. 395, affirmed by our supreme court in Staines v. Shore, 16 Pa. St. 200, and Pennock's Appeal, 14 Pa. St. 446, is so pertinent to the subject that I quote from it as follows: "The question, then, is whether the owner can privately employ an other person to bid for him. The basis of all dealings ought to be good faith, for, more especially in these transactions, where the public are brought together upon a confidence that the articles set up to sale will be disposed of to the highest real bidder, that could never be the case if the owner might secretly and privately enhance the price by a person employed for that purpose; yet tricks and practices of that kind daily increase, and grow so frequent that good men give in to the ways of the bad and dishonest, in their own defense. But such a practice was never openly avowed. An owner of goods set up to sale at an auc tion never yet bid in the room for himself. If such a practice were allowed, no one would bid. It is a fraud upon the sale and upon the public. The disallowing it is no hardship upon the owner; for, if he is unwilling his goods should go at an underprice, he may order them to be set up at his own price, and not lower. Such a direction would be fair. Or he might do as was done by Lord Ashburnham, who sold a large estate by auction. He had inserted in the conditions of sale that he himself might bid once in the course of the sale, and he bid at once £15,000 or £20,000. Such a condition is fair, because the public are then apprised, and know upon what terms they bid. In Holland it is the practice to bid downwards. The question, then, is, is such a bidding fair? If not, it is no argument to say it is a frequent custom. Gaming, stock-jobbing, and swindling are frequent. But the law forbids them all. Suppose there was an agreement to abate so much, which is the case where goods are sold by one person in the trade to another. They abate sometimes 10 or 15 per cent. Such an agreement between the owner and bidder, at a sale by auction, would be a gross fraud. What is the nature of a sale by auction? It is that the goods shall go to the highest real bidder. But there would be an end of that if the owner might privately bid upon his own goods. There is no contract with the auctioneer. He is only an agent between the buyer and seller. He may fairly bid for a third person who employs him, but not for the owner." In Wheeler v. Collier, Moody & M. 123, Lord Tenterden, C. J., said: "If the owner of an estate put up for sale by auction employ a person to bid for him, the sale is void, although only one such person be employed, and although he is only to bid up to a certain sum, unless it is announced at the time that there is a person bidding for the owner." An excellent review of these various authorities appears in the case of Towle v. Leevitt, 23 N. H. 360, wherein the court adopted the remarks of Chancellor Kent (2 Kent, Comm. *539), as the true doctrine,

to-wit, that "in sound policy no person ought in any case to be employed secretly to bid for the owner against a bona fide bidder at a public auction. It is a fraud in law on the very face of the transaction, and the owner's interference and right to bid ought to be intimated in the conditions of sale." In support of all these findings, and especially the fifth, I cite Staines v. Shore, 16 Pa. St. 200, wherein the supreme court held that it made no difference that without the bids of employed puffers the property would go for less than its value, and, commenting upon the ruling of the court below, said: "The ruling judge instructed the jury that, if the horse was actually worth the sum to be paid for him, the buyer got the value of his money, and could not have been defrauded. The fallacy of the principle is in assuming that there is a standard of value independent of the wishes and wants of the bidders, and that every man is willing to buy by it.・・ A man is defrauded whenever he is incited by artful means to bid more than he otherwise would. He has a right to buy at an undervalue, where the necessities of the owner compel him to sell; and whenever the price is ever so little enhanced by a secret contrivance, he is cheated. A sale by auction presupposes a sacrifice, or at least a willingness to sell for what can be had; but, should the vendor stick for the last penny, it would be idle to set the property up, because his price could be as readily obtained at private sale. If the owner proposes to sell without reservation as to price, let him openly reserve a right to bid. For no fair purpose is the employment of a puffer necessary, and it must vitiate every sale in which recourse is had to it." Rigg v. Schweitzer, supra, does not rule this question against the plaintiff.

INJUNCTION PURCHASE OF INTEREST IN NEWSPAPER CONTROL AS EDITOR.-One of the points decided by the Supreme Court of Missouri, in Jones v. Williams, 39 S. W. Rep. 486, is that one who purchases an interest in the stock of a corporation, and, in consideration thereof, is to be editor and manager and have control of its newspaper, for a definite time, at a fixed salary, is entitled to have his control protected by injunction, remedy at law not being adequate. The opinion, which discusses several interesting questions growing out of the main point passed on, concludes as follows:

Is there such a want of mutuality of remedy as will prevent a court of equity from granting injunctive relief? Under the contract, plaintiff was appointed editor and manager of the Post-Dispatch. These duties require personal services, which it may be agreed a court of equity could not enforce. It could not, by decree, compel an editor to write editorials or to give direction to the business. But this want of power in the courts is supplied in the contract itself. While Mr. Pulitzer expresses the utmost confidence in plaintiff, and his willingness and ability to discharge his duties with fidelity, his own business instincts are too acute to allow the contract to rest in confidence alone. The corporation was organized "for pecuniary profit and gain." Rev. St., 1889, sec. 2771, subd. 11. Mr. Pulitzer does not lose sight of the primary objects to be accomplished. He

expressly fixes a pecuniary test of ability and fidelity. The contract provides: "And it is further agreed by and between the parties hereto, as a test of the ability of the party of the second part to properly manage and edit said St. Louis Post-Dispatch, that such appointment and salary shall cease and determine in the event that the gross revenues of the Post-Dispatch from advertising and circulation combined shall, during the year 1895, be less than the gross revenues from the same sources combined were for the year 1894. And it is further agreed by and between the parties hereto that said appointment and salary shall cease and determine in the event that the net profits of the Post-Dispatch for the year 1896 shall be less than the net profits for the year 1895. And it is further agreed by and between the parties hereto, their executors, administrators, or assigns, that in the case of the death of the party of the second part, his resignation, failure of health, or retirement, or inability to perform the duties and labors of editor and manager of the Post-Dispatch at any time within three years from the date of the execution of this contract, the party of the first part shall have the option to repurchase for the sum of eighty thousand dollars ($80,000) the herein mentioned one thousand six hundred and sixty-seven (1,667) shares of the stock of the Pulitzer Publishing Company, which in such event the party of the second part agrees to sell and transfer to the party of the first part for said sum of eighty thousand dollars ($80,000)." It is further provided that the appoint. ment and salary should cease if plaintiff should "at any time during said term accept or occupy any public or political office, elective or otherwise, or engage in any other business, of any kind or description." The test of duty and liability is thus expressly agreed upon, which is absolutely determinable, and does not depend upon the views or opinions of either party. The failure to come up to the test is followed by a forfeiture of the position and salary. The test is success. The remedy, in case of failure for any of the causes, is removal from position and forfeiture of contract. Should plaintiff fail to perform his contract according to the tests provided, and should then persist in controlling the paper, in disregard of the provision that the appointment should cease, there can be no doubt that a court of equity would enjoin his interference, just as it can enjoin an interference with his rights if threatened. Keeping in view all the time that the right to manage and control the newspaper is the matter in issue, it is apparent that the remedy is natural. The question is, are the defendants entitled to the control? A court of equity can answer the question, and enforce its conclusions, on the petition of either party. Defendants could, undoubtedly, charge by cross bill that plaintiff had failed to perform the conditions of the contract, and had forfeited his right to control, and, if proved, the court could require plaintiff to allow them to resume control and enjoin an interference with it.

The law is well settled that personal contracts for service will not, because they cannot be enforced by courts of equity. But we do not view the duties to be performed by plaintiff under the contract as mere personal service or simple employment. In his control and management of the paper he knows no master or employer. He is answerable to no one for the manner of performing his duty. He is accountable only for the stipulated results. His position gives him a property right in the possession, control and management of the paper he agrees to edit and manage. A reading of the contract will show that the

central idea of the executory part of it is the control and management of the paper. That means the pos session and use of the property, and not mere em. ployment to write editorials.

RIGHT OF A CREDITOR TO SUE AND ATTACH BEFORE EXPIRATION OF THE CREDIT.

The statute laws of many of the States contain no provisions by which a creditor is permitted to attach before maturity of his debt, the effects of a debtor who fraudulently obtained credit for goods, or who is about to abscond from the jurisdiction with his prop erty, or who is disposing of his effects for the purpose of hindering, delaying and defrauding his creditors. The question therefore arises, whether a creditor may have an attachment under such circumstances before maturity of his debt, in the absence of an express statutory concession of the right. This question depends mainly upon another, namely, whether the defrauded vendor may maintain assumpsit for the price of the goods before the expiration of the credit. The general rule of the common law undoubtedly is that no action can be maintained to recover a debt which has not yet matured.1 It the debt be for the purchase price of goods, and the purchase was effected by means of the fraudulent representations of the buyer, the purchaser must nevertheless await the expiration of the credit before he can maintain an action for the price; for such an action waives the fraud and affirms the contract. The vendor, however, may disaffirm the contract and sue in replevin to recover the goods themselves, or in trover to recover their value, treating them as having been wrong. fully gotten possession of by the purchaser and converted to his use. These two actions amount to an election on the part of the seller to treat the contract as void, and it is therefore immaterial, with respect to his right to maintain them, whether the credit had or had not expired at the time when they were instituted. But they are ex delicto in form,

12 Stark. Ev. 55; Musser v. Price, 4 East, 152; Dutton v. Solomonson, 3 Bos. & Pul. 584.

2 Chitty Cont. (10th Am. Ed.), 432; Ferguson v. Carrington, 9 Barn. & Cres. 59.

3 Chitty Cont. Id.; Ferguson v. Carrington, 9 Barn. & Cres. 59; Strutt v. Smith, 1 C. M. & R. 312; Selway v. Fogg, 5 Mees. & W. 83.

and the gist of them is a tort committed by the defendant; hence they cannot be aided by attachment in any of the States in which attachments are allowed only in suits to recover a debt or damages for the breach of a contract. In consequence of these principles, it is settled law in several of the States that no action can be maintained, and no attachment sued out, in any case in which the debt of the plaintiff has not matured, whether the defendant was or was not guilty of fraud in the procuration of the credit. Two important modifications of this doctrine of the common law have been established, both by English and American decisions. The first is, that in any case in which the vendor has been fraudulently induced by the purchaser to accept an invalid or worthless note, bill, or other security for the price of the goods, such security and the credit incidental thereto, may be ignored, and an action immediately brought to recover the value of the goods. These decisions proceed upon the idea that the security being a nullity, the law immediately implies an undertaking on the part of the purchaser to make present payment of the price of the goods. The second modification is, that if the purchaser has resold the goods before the expiration of the fraudulently procured credit and received the proceeds, the vendor may at once maintain assumpsit against him, upon the ground that no title to the goods passed by reason of the fraud, and that therefore the proceeds of the resale were so much money received by the defendant to the use of the plaintiff, the original vendor. It is perhaps not easy to distinguish such a case in principle from those in which the right to maintain an action for the price is denied; but it must be ad

Galloway v. Holmes, 1 Mich. 330; Emerson v. Steel Co., 100 Mich. 133; Jones v. Brown, 167 Pa. St. 395; Kellogg v. Turpie, 93 Ill. 265; Schilling v. Beane, 36 Ill. App. 513; Butler Printing Co. v. Reagan Paper Co., 35 Ill. App. 152; Dellone v. Hull, 47 Md. 112; Allen v. Ford, 19 Pick. (Mass.) 217.

Chitty on Bills, 196; Puckford v. Maxwell, 6 D. & E. 52; Stedman v. Gooch, 1 Esp. 3; Manfrs. Nat. Bank v. Gore, 15 Mass. 75; Montgomery v. Forbes, 148 Mass. 249; Wilson v. Force, 6 Johns. (N. Y.) 109; Pierce v. Drake, 15 Johns. (N. Y.) 475.

Benjamin on Sales (Bennett's Am. Ed.), 445, note; Bennett v. Francis, 2 Bos. & Pul. 554; Jones v. Hoar, 5 Pick. (Mass.) 285; Mann v. Stowell, 3 Pinney (Wis.), 220; Barrett v. Koella, 5 Biss. Cir. Ct. (U. S.) 40; Willet v. Willet, 3 Watts (Pa.), 277; Kellogg v. Turpie, 93 Ill. 265; Creel v. Kirkham, 47 Ill. 344; Johnston v. Salisbury, 61 Ill. 316.

mitted that the exception so established is eminently reasonable and just toward the vendor, and productive of no injustice to the purchaser. The common law rule that no action can be maintained for the price of goods until the credit upon which they were sold has expired, even where the credit was fraudulently procured, has not been respected in all of the American courts. In the State of New York the contrary rule is firmly settled. The decisions in that State repudiate the English doctrine that the law will not substitute for the express contract to pay at a future day, an implied contract on the part of the fraudulent purchaser to make present payment. They rest largely upon the principle announced in the leading case of Moses v. McPherlan,s that assumpsit will lie in any case to recover money which the defendant ex æquo et bono, ought not to retain in his hands; and upon the further principle that one who has a right of action ex contractu, and a right of action ex delicto growing out of the same transaction, may waive the tort and sue on the contract-the implied con. tract in this case, the express contract being treated as a nullity. The parties are presumed to stand upon the rights and obligations resulting from a 'delivery of the goods. The buyer cannot complain, because he is presumed to know that his fraud avoids the express contract, and makes him by implication of law liable to pay immediately upon delivery of the goods. He cannot be permitted to take advantage of his own wrong to set up a formal, technical, objection against the vendor's recovery. The New York decisions have been followed in Kentucky, and perhaps in other States.9

It remains to be considered whether the common law rule which prohibits an action of assumpsit before the expiration of a fraudulently procured credit, is affected by the

7 Roth v. Palmer, 27 Barb. (N. Y.) 652; Wilson v. Force, 6 Johns. (N. Y. 110; Weigand v. Sichel, 3 Keyes (N. Y.), 120; Phillips v. Wortendyke, 31 Hun (N. Y.), 192; Reid v. Martin, 4 Hun (N. Y.), 590; Bach v. Tuch, 126 N. Y. 53; Crossman v. Rubber Co., (N. Y.); 27 N. E. Rep. 400; Eppens v. McGrath, 3 N. Y. Supp. 213; White v. Harrison, 1 City Ct. Rep. (N. Y.)

482.

82 Burr, 1012; 1 W. BI. 219.

9 Dietz v. Sutcliffe, 80 Ky. 650; Wood v. Garland, 58 N. H. 154, semble. An English nisi prius decision (De Symons v. Minchwinch, 1 Esp. 430) establishes the same rule, but it must be considered to be overruled by the cases cited in note 3, ante.