Central Law Journal.

ST. LOUIS, MO., FEBRUARY 2, 1894.

It is to be hoped that the senate will promptly confirm the nomination of Mr. Wheeler H. Peckham of New York as an as

sociate justice of the United States Supreme Court. His selection is in every way satisfactory and commendable. He comes of a family of jurists, is learned in the law, and occupies a commanding position at the head of the New York bar. Mr. Peckham has recently received the rather unusual distinction of an election to a third term as president of the New York Bar Association and enjoys to an unusual degree the confidence of the legal profession. Owing to the fact that there is a vacancy the Supreme Court is not at present considering cases in which constitutional questions are involved. The condition confronting the court was recognized by it a few days ago, when, at the suggestion of one of the leading counsel in an important interstate case involving a construction of the constitution, and which had been set down for argument, the court let the case go over to be called up when a full bench shall be secured. The necessity therefore for prompt action in the confirmation of Mr. Peckham will be seen.

commerce

In the recent Indiana case of Woodruff v. Bowen (34 N. E. Rep. 1113), it was held that the widow of a fireman cannot recover damages for his death caused by the collapse of a defective and dangerous building on which he was standing while fighting the flames. The fire had caught in the defendant's building and the plaintiff's husband went there at the call of duty. The building was weak in construction and being stored with paper goods which absorbed the water that was poured in, it collapsed under the heavy weight. The court based its decision on the ground that the fireman was a mere licensee, and therefore the defendant had no responsibility towards him, except that of "abstaining from any positive wrongful act," the fireman being regarded as a licensee merely because the law gave him a right as against the deVol. 38-No. 5.

fendant to intrude upon the premises for the public good. A contemporary thinks it would be well enough as a result, if the simple test in all cases were whether the injured person was a so-called "licensee," but it hesitates to believe that this is the true test to be applied. It argues that the real test is whether the business on which the outsider enters is purely his own, or is partly or entirely that of the owners-in other words, whether he is there selfishly or for the sake of the owner. In the case of Plummer v. Dill, in 1892, the Massachusetts Supreme Judicial Court said: "There must at least be some mutuality of interest in the subject to which the visitor's business relates, although the particular thing which is the object of the visit may not be for the benefit of the occupant.' In the Indiana case above cited no one would or could deny that the whole object of the fireman's presence was the preservation of the defendant's property with that of others. The conclusion seems obvious. It certainly accords much more with our sense of justice that the fireman's widow should recover some compensation for the loss of her husband. In the case of Law v. Railway Co., 72 Me. 313, decided by the Supreme Court of Maine, damages were awarded to a custom-house officer, who was injured by a defect in the defendant's wharf, while watching there to prevent smuggling. The case of a fireman who is killed or wounded, owing to the defective contruction of the defendant's building, while endeavoring to save the defendant's property, seems in principle much

the mortgagee, alleging the invalidity of the mortgage, and attempting to subject the property to their claims, such bill must be dismissed for want of jurisdiction upon the entry of a foreclosure decree in the mort

NOTES OF RECENT DECISIONS.

EQUITY JURISDICTION-CREDITOR'S BILLSIMPLE CONTRACT CREDITORS.-The Supreme Court of the United States in Hollins v. Brierfield Coal & Iron Co., 14 S. C. Rep. 127, decided some important questions of law governing insolvent corporations. It was held that the settled rule of the Federal Courts that simple contract creditors cannot come into equity to obtain the seizure of their debtor's property, and its application to their claims, applies with the same force when the debtor is a corporation; and the rule is not changed either by the insolvency of the corporation, its failure to collect in full all stock subscriptions, its execution of an illegal trust deed, or the pendency in the same court of a suit to foreclose the samé, for neither of these things, nor all together, operate to charge upon the corporation's property any lien or direct trust in favor of simple contract credit

ors.

The expression, often used, that the property of a corporation constitutes a "trust fund" for its creditors, only means that when the corporation is insolvent, and a court of equity has possession of its assets for administration, such assets must be appropriated to the payment of its debts before any distribution to the stockholders; but as between a corporation itself, and its debtors, the former does not hold its property in trust, or subject to a lien in favor of the creditors, in any other sense than does an individual debtor. In a suit to foreclose a mortgage on the property of a corporation, simple contract creditors, who contest the validity of the mortgage, are not prevented from intervening to set up their claims by the rule which forbids, in a foreclosure suit, the litigation of a title adverse to the mortgagor. Where, pending a suit to foreclose a mortgage on the property of a corporation, certain simple contract creditors file a separate bill against the corporation, its stock and bondholders, and

son dissented.

NEGOTIABLE INSTRUMENT BONA FIDE HOLDER BANKS AND BANKING RAISED DRAFT - PROXIMATE CAUSE.-In Exchange Nat. Bank v. Bank of Little Rock, decided by the Circuit Court of Appeals for the Eighth Circuit it appeared that a bank clerk whose duty it was to prepare exchange for the cashier's signature, so drew a draft for $25 to his own order that the amount could be readily altered and after procuring the cashier's signature by pretending that he wished to make a remittance of that amount, altered the draft so that it presented the appearance of a genuine draft for $2,500, and thereafter indorsed it, and procured it to be discounted. It was held that the forgery by the clerk, and not the negligence of the bank, was the proximate cause of the loss, and the bank was not liable therefor, and that the bank was not liable on the ground that the forger was its confidential employee, because in this transaction he acted as purchaser, and not as an employee, and because the purchase of the draft was complete, and he was the owner of it, when the forgery was committed. There are good reasons for holding the maker of negotiable paper liable for any loss of which his carelessness is the proximate cause. If he carelessly intrusts checks or notes having blanks therein that were evidently intended to be filled, to a third party, who subsequently fills up and sells them, or if he in trusts to a confidential clerk the duty of filling the blanks in notes or drafts he has assigned or indorsed, and the clerk inserts excessive amounts, he cannot defend against such paper in the hands of an innocent purchaser, and the reasons referred to above fairly apply. In such cases the loss is the natural and probable consequence of his own negligence, a loss that he might have and ought to have foreseen, a loss the risk of which he fairly assumes by his own acts. But says the court when the drawer has issued a draft or note complete in itself, but in such a form as to be easily altered without attracting attention, and it is

afterwards fraudulently raised by a third person, without his knowledge or authority, and then bought by an innocent purchaser, it is not his negligence, but the crime of the forger, that is the proximate cause of the loss. Forgery and consequent loss cannot be said to be the natural or probable consequence of issuing a draft inartificially drawn. The presumption is that dealers in commercial paper are honest men, and not forgers, and that such paper will not be changed. It will not do to say that every one whose negligence invites another to commit a crime is liable to a third party for the loss the latter sustains thereby. One who, by carelessly leaving a pile of shavings near his house, invites another to commit the crime of arson that results in the burning of his heighbor's buildings, is not liable to his neighbor for that

loss. The farmer who negligently turns his horse into the highway, and thereby invites a thief to steal it, does nor thereby lose title to his horse when an innocent purchaser has bought him of the thief. Nor is there, in our opinion, any sound reason why the liability of the maker of a promissory note or bill of exchange, complete in itself when issued, but subsequently fraudulently raised without his knowledge or authority, should be measured by the facility with which a third person has committed the crime of forgery upon it, or why he should be held liable for the loss resulting from such a forgery. The altered contract is not his contract. His representation was not that the forged contract was his, but that the original contract was his, and the rule caveat emptor makes it the duty of the purchaser when he buys it, and not of the maker, to then see that it is genuine. To cite and attempt to distinguish the decisions upon this queswould be a work of supererogation. The authorities have all been carefully reviewed, and the conclusion to which we have arrived has been reached in Holmes v. Trumper, 22 Mich. 427, by Mr. Justice Christiancy, with whom Chief Justice Campbell and Justices Graves and Cooley concurred, in Bank v. Stowell, 123 Mass. 196, by Chief Justice Gray, without dissent from any member of the Supreme Judicial Court of Massachusetts, in Burrows v. Klunk, 70 Md. 451, 17 Atl. Rep. 378, in Bank v. Clark, 51 Iowa, 264, 1 N. W. Rep. 491; in Fordyce v. Kos

minski, 49 Ark. 40, 3 S. W. Rep. 892, and in Goodman v. Eastman, 4 N. H. 455; while the decisions in Simmons V. Atkinson & Lampton, Co., 69 Miss. 862, 12 South. Rep. 263; Charlton v. Reed, 61 Iowa, 166, 16 N. W. Rep. 64, and Angle v. Insurance Co., 92 U. S. 330, 340,- are to the same effect. This question has been much discussed, and the authorities differ, but we think the better reasons, the most forcible and convincing opinions, and the marked trend of the later decisions support the view of the court below.

CONSTIUTIONAL LAW-REPEALING GRANT OF LOTTERY FRANCHISE.-In Commonwealth v. Douglas, 24 S. W. Rep. 233, decided by the Court of Appeals of Kentucky, it was held, overruling earlier decisions in the same State, that the legislature has power to refuse the grant of a lottery franchise even though rights have been acquired and liabilities incurred upon the faith of the privileges conferred by such grant. The court said in part:

The Supreme Court of the United States, in Stone v. Mississippi (101 Sup. Ct., 814), in construing the provision of the Federal Constitution that declares that the State shall pass no laws impairing that obligation of contracts, held that the inhibition related to "prop erty rights," and not to matters that were "governmen tal." The court then held, in strong and emphatic language, that lotteries, being a species of gambling, were vicious and demoralizing in the community, and that, as it was the trust duty of the State government to protect and promote the public health and morals, it could not sell, barter or give away that duty, and that the utmost power the legislature could exercise was to grant a license to carry on that species of gambling, which only protected the licensee from the pains and penalties imposed upon that species of gambling during the existence of the license, and that the legis lature granting the license had no power to bind a subsequent legislature to its line of policy upon these subjects, and that a subsequent legislature might repeal the grant of the license, although it had been paid for. It seems to us that this decision, defining the provision of the federal constitution as to what subjects or contracts, and protected by it, and that lottery grants, though paid for, are not protected by said provision, is binding upon this court, and has the effect to overrule its decision holding the contrary rule.

But, apart from the binding force of the decision, it seems that its logic is conclusive and convincing in drawing the distinction between the contractual and governmental power of the States, to wit: That the provision of the federal constitution in reference to contracts only inhibits the States from passing laws impairing the obligation of such contract as relate to property rights, but not to subjects that are purely governmental. The reason for this distinction must be apparent to all, for, when we consider that honesty, morality, religion and education are the main pillars of the State, and for the protection and promotion of which government was instituted among men, it at

once strikes the mind that the government, through its agents, cannot throw off these trust duties by selling, bartering, or giving them away. The preservation of the trust is essential to the happiness and wel. fare of the beneficiaries, which the trustees have no power to sell or give away. If it be conceded that the State can give, sell, and barter any one of them, it follows that it can thus surrender its control of all, and convert the State into dens of bawdy houses, gambling shops and other places of vice and demoralization, provided the grantees paid for the privileges, and thus deprive the State of its power to repeal the grants and all control of the subjects, as far as the grantees are concerned; and the trust duty of protecting and fostering the honesty, health, morals and good order of the State would be cast to the winds, and vice and crime would triumph in their stead. Now, it seems to us that the essential principles of self-preservation, forbid that the commonwealth should possess a power so revolting, because destructive of the main pillars of government. The power of the State to grant a license to carry on any species of gambling, or with the privi lege of revoking the same at any time, has an unwholesome effect upon the community, and tends to make honest men revolt at the injustice of punishing others for engaging in like vices. We have, for instance, at this day, men confined in the State penitentiary for setting up and carrying on gambling shops whose tendencies are not much more demoralizing, if any, than the licensed lottery operator, who goes free under the protection of the law. The one wears a felon's garb, and the other is protected by a license, which he claims as an irrevocable contract, because he has paid for the privilege. The privilege ought never to be granted, and, under the present constitution, can never be. As said, to impress the privilege with the idea of contract because it was paid for, might fill the whole State, and especially the cities, with gambling shops and enterprises protected by contract; and the few gamblers that might not be thus protected, and who would be liable to be punished for gambling, would not be, because it would strike honest men as unjust to punish the poor wretch for doing that which was made lawful for others to do by paying for the privi lege. As said, we are bound by the construction given to the provision of the federal constitution by the Supreme Court relating to the impairment of contracts by the States, to the effect that the provision does not relate to lottery franchises, though paid for, and that the matter of such grants being strictly within the police power of the State, the State could not sell or barter away its control of the subject.

CRIMINAL CATION BY INJURED PARTY.-In State V. Frisch, 14 South. Rep. 132, decided by the Supreme Court of Louisiana, it was held that so far as the right of the State to pursue and punish a criminal is involved, the subsequent ratification of the act by the injured party will not bar a prosecution. The court said in part:

LAW-EMBEZZLEMENT-RATIFI

The indictment charges the defendant with embezzling $200, which was one of the items in the account current submitted to Gassner & Co. There was evidence before the jury of ratification by Gassner & Co. of all the unauthorized acts of the defendant, and had the proof been sufficient, as alleged by defendant, the aw applicable to the ratification by a principal of the

unauthorized acts of the agent would be applicable in a civil suit between the principal and the agent. But it has no place in a criminal prosecution when the act is of such character as to involve a crime denounced by the State as opposed to public policy. Embezzlement is an offense of this character. The loss to the individual is a matter to himself. It is optional with him to recover the amount due him in consequence of the embezzlement in the implied contract to reimburse him. But the crime concerns the public policy of the State, and no agreement, compromise or ratification can make that which she has denounced as a crime an innocent act, leaving the offender free from the punishment attached to it. The offense of embezzlement is of that nature which the public takes notice of as injurious to itself. 1 Bish. Crim. Law, par. 232. Mr. Bishop says in the paragraph referred to: "Nothing can be more purely a tort to the individual alone than a simple larceny where there is no breach of the peace; no public loss of property, since it only changes hands; no immorality, corrupting the minds of the young; no person in any way affected but him who takes, and him who loses, the thing stolen. And as in larceny, so it is in many other crimes. A pubic offense is committed, while only an individual suffers." Any agreement to suppress the crime would be contrary to public policy, and void, as the State has the right to pursue and punish the criminal. Mechem Ag. par. 116; Shisler v. Vandike, 92 Pa. St. 447; McHugh v. County of Schuylkill, 67 Pa. St. 391. The case of Fagnan v. Knox, 66 N. Y. 525, was for malicious prosecution for the crime of embezzlement. The court, upon request charged: "If you find that the defend ant, prior to the complaint against the plaintiff charg ing him with embezzlement, settled with the plaintiff for the moneys, the defendant afterwards charged the plaintiff with having embezzled as and for a debt on a contract, expressed or implied, such fact would be evidence that the defendant did not believe the plaintiff had embezzled the said moneys." On appeal to the Court of Appeals the charge was held erroneous. Chief Justice Church, in the opinion of the court, said the effect of the charge "was to produce an erroneous impresion." "The effect of it was to convey the idea that the settlement and payment of the amount claimed by defendant was evidence that no crime had been committed, and the defendant did not believe that there had been. . . . The defendant had a legal right to settle with the plaintiff, and to receive payment for the amount abstracted as and for a debt upon an implied contract, and such settlement was no bar to a criminal prosecution, nor did it furnish evidence that the defendant did not believe that the money had been embezzled." In the case of People v. Hurst (Mich.), 28 N. W. Rep. 838, relied upon by defendant, there was no question raised as to the "ratification" of the acts which constituted the embezzlement. It was a question of felonious intent-whether the mere failure to pay the money indicated a design to cheat and deceive the owner. A candid admission of the debt was made at once on inquiry, and partial payment was made and security given at different times for the debt. No such question is presented here. The bill does not present the question whether or not the transaction between the parties had assumed the shape of the facts in the above case. The bill of exceptions does not show that previous to the settlement the transaction assumed the shape of debtor and crediror, or that in the settlement offered in evidence there was any such relation between the parts, other than the implied contract to make restitu on for the amount embezzled. The defendant wa

e

convicted. We must presume that all the constituent elements of embezzlement were proved, and among them concealment. On this point there is no conflict. The question then is did the presentation of the account to defendant, or, as is alleged, the account presented to Sugg made out by defendant at Sugg's request or demand, showing his wrongful use of the money, in the management of the business, his acknowledgment of the account, and his promise to pay the amount converted by him, and his refusal to assume other obligations, constitute such a state of facts as to make the business relation between the parties that of debtor and creditor? We think not. The embezzlement had been committed. No transaction between the parties could have prevented the prosecution, which was not to enforce any right of the prosecutors, but to punish a crime committed against the State.

HAWKERS AND PEDDLERS-WHO ARE -CITY ORDINANCE.-In Village of Stanford v. Fisher, the Court of Appeals of New York decided that one who, having a place of business in another town, goes about delivering goods at the house of his customers, in pursuance of orders previously taken, and takes orders for future delivery, is not a peddler, within the meaning of Laws 1883, ch. 465, authorizing village trustees to regulate or prevent peddling in the streets. Gray, J., says:

The evidence established that the defendant had a residence or store at Oneonta, in the neighboring county of Otsego, and transacted a business with persons in the village of Stamford, Delaware county, in soliciting orders, and subsequently delivering, pursuant to such orders, articles of groceries for family use. For this purpose he had a wagon, with which, about once in each month, he made trips to Stamford, filling his previous orders, and taking new ones at the various houses. The defendant was not shown to have sold, or to have offered for sale, any goods upon the street, or otherwise to have transacted this business than as described; so that the decision of the question turns upon the point of whether that method of conducting a business distinguishes it from the peddler's or hawker's occupation. It seems to me, clearly, that such a distinction does exist; that it is a very substantial one; and that, therefore, neither statute nor resolution can be held to apply to the defendant's

case.

It is unnecessary to discuss the legislative power to enact the law in question. It is perfectly competent to empower municipal corporations to prescribe regulations for the orderly conduct of business within their limits, and upon the public streets, and to provide that the itinerant peddler or hawker should contribute to the revenues of the municipality by the payment of a license fee, in the nature of a tax upon his business, in return for the privilege and protection accorded to him in so carrying on his trade. Incidentally, there may exist the purpose, in authorizing such measures, to promote a just and equal protection of those traders who have a local habitation and their establishments in the village, and who bear their share of the municipal burdens. As the statute, however, is in restriction of the common law, and a general righ of persons to pursue a legitimate and innocent occupation and to deal rightfully and usefully with their

property, it should receive a strict construction; and, in every instance where one is sought to be charged with a penalty for a violation of the village ordinance, his occupation must be shown to be clearly within those occupations which are aimed at. I would not hold that such a statute is not to receive an equitable as well as a strict construction, for it is in purpose beneficial to the community where it is to receive its operation. But its operation should be confined to those cases where it is plainly discoverable that the mischief exists for which the law was intended to provide a remedy, and where the need is evidenced for the extension of the protection intended by the legis lature. We come, therefore, to consider whether the pursuit of this defendant can fairly be deemed to be that of a peddler, as it was alleged in the complaint of the village. Our attention is called to the definitions given by lexicographers to the term "peddler," and they substantially agree that he is a peddler who travels about the country, carrying wares for sale in small quantities. The dominant idea involved in such an occupation seems to be that the individual carries his stock in trade, consisting in small wares, on foot or in a vehicle, about the country, offering them for sale, and then and there selling them. The statute, in coupling the terms "hawking" and "peddling," itself suggests the idea that the features of itinerancy and a public offering of goods for sale are present in the occupations of the hawker and the peddler. Either one avails himself of the highway for the conduct of his trade in about the same manner. In the case of the defendant, however, he resided in a different part of the State, and presumably contributed his share to the discharge of the public burden of taxation.

He did not hawk or cry out his wares in the public streets, nor did he expose, offer, or sell them thereon. He simply delivered at the houses of customers, from whom he had previously received orders, the articles ordered. The concept of such an occupation sharply distinguishes it from that of the itinerant street vendor of articles. The case of Rex v. McKnight, 10 Barn. & C. 734, is in point. There the defendant was in the employ of a tea dealer, and was sent by his master about the neighboring county once a fortnight solicit ing orders, and on subsequent occasions was sent to deliver small parcels of tea in pursuance of these orders. This was held not to be an exposing for sale, or a carrying to sell, within the meaning of the hawkers' and peddlers' act, so as to subject the defendant to a penalty for trading without a license. In the decision of that case, it was considered as a material fact that the bargain for the goods and the delivery were on different occasions. Cases in the courts of other States, to which our attention has been called, serve to confirm the view taken here. Such are those of, Com. v. Ober, 12 Cush. 498; Com. v. Eichenberg, 140 Pa. St. 160, 21 Atl. Rep. 258; and Ballou v. State, 87 Ala. 144, 6 South. Rep. 393. In my opinion the case of the defendant was not shown to be one within the meaning of the statute, and he could not be subjected to the penalty provided for in the village ordinance.