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resident, although not personally yet to the Oklahoma may be only part of a single extent of his property held, or his occupa- business carried on in different states. The tion or business carried on therein, to a income of property in other states may be induty to pay taxes not more onerous in ef
vested in Oklahoma and used to carry on the fect than those imposed under like circum
business there. The net result from the stances upon citizens of the latter state."
business, regarded as an entirety, may be
much less than the net income from the The last observation of the Court brings up what to our mind is the strongest ob
properties located in Oklahoma. Therejection which the plaintiff in the Shaffer
fore, a non-resident engaged in business in Case raised to the constitutionality of Oklahoma and other states might conceivthe Oklahoma act, i. e., that it permits res ably be at a disadvantage with his resident idents to deduct from their gross income competitor engaged in a similar business not only losses incurred within the state of covering different states, since the latter Oklahoma but also those sustained outside would be taxed on the net income from of that state, while non-residents may de- bis whole business while the former is duct only those incurred within the state. forced to pay a tax on the net income of The Court, however, in answer to this con
the particular business done in Oklahoma. tention calls attention to the fact that the
It seems to us that in order to give to difference in this respect is "only such as
non-residents, who are citizens of another arises naturally from the extent of the juris
state, the same privileges and immunities diction of the state in the two classes of
that are given to citizens of Oklahoma, the cases, and cannot be regarded as an un
non-resident, engaged in a single business friendly or unreasonable discrimination."
enterprise covering several states, should at To our mind the plaintiff's contention least have the right, if he wishes to exercise cannot be so easily disposed of as the Court it, to return his entire income derived from attempts to dispose of it. The Court ad | all sources and make the usual deductions mits that a state may permit its own citi | for losses elsewhere incurred that a resizens to deduct from gross receipts losses dent of Oklahoma may do. In other wherever these accrue, but that it is under
words, a non-resident should be allowed to no obligation to accord to non-residents a
treat a business covering more than one deduction by reason of losses elsewhere in
state as a whole or to regard the business curred, for the reason that the state in the
in the taxing state as separate and distinct case of non-residents, only seeks to tax in
for which a return as provided for in the come from the non-resident's property or
Oklahoma law would be proper. business within the state, while it taxes the income of residents from all sources. This argument does not satisfy our mind nor, we In the decision in the Travis case, the suspect, does it fully satisfy the mind of Court recognizes the fundamental principle, Justice Pitney, who shows what is passing which, we believe, it failed to recognize in through his mind when he makes the unnec the Shaffer case, that a state in imposing essary observation that "it may be re an income tax has no right to discriminate marked, in passing, that there is no show
between residents and non-residents. In ing that appellant has sustained such losses,
this case the basis of discrimination was a and so he is not entitled to raise this ques
provision in the New York law which pertion."
mitted residents to enjoy an exemption of
$1,000 in the case of single persons and It seems clear to us that a non-resident may be put to an unfair disadvantage un
to an unfair disadvantage un- $2,000 in the cases of those who were heads der the Oklahoma law. His business in l of families. No such exemption was
granted to non-residents. The Court held | emptions that are accorded to citizens of that this provision discriminated against cit- | New York and denied to them.” izens of Connecticut and New Jersey who It seems to us that both cases decided by earned salaries from their employment in the Court proceed on the wrong theory. New York City. We cannot distinguish in There is no question of the right of a state principle the argument which the Court to tax incomes both of residents and of nonmakes in behalf of the "commuters” of residents—in the first case against the perNew Jersey and Connecticut from that son as to all income from all sources; in the which we have tried to make in the preced second case, in rem, as to income from ing paragraph in behalf of non-resident property or business located in the state. merchants engaged in a single business cov- The sole question here is, can the non-resering several states. The Court said:
ilent, when a citizen of another state, be de
prived of any of the privileges and immuni"It is a matter of common knowledge
ties of citizens of the taxing state as guaranthat from necessity, due to the geographical situation of that city, in close proximity to
teed to him by Section 2 of Article IV of the neighboring states, many thousands of
the Constitution? The analogy to the Fedmen and women, residents and citizens of | eral Income Tax Act in taxing the income those states, go daily from their homes to of aliens, which Justice Pitney draws to his the city and earn their livelihood there.
support in the Shaffer case is wholly illogThey pursue their several occupations side
ical and inapplicable since aliens under the by side with residents of the state of New York-in effect competing with them as to
Constitution do not enjoy the same guaranwages, salaries, and other terms of employ tee against discrimination as do citizens of ment. Whether they must pay a tax upon other states. In Paul v. l'irginia, 8 Wall. the first $1,000 or $2,000 of income, while 108, 180, Justice Field declared "it was untheir associates and competitors who reside
doubtedly the object of the clause in quesin New York do not, makes a substantial difference. Under the circumstances as dis
tion to place the citizens of each state upon closed, we are unable to find adequate
the same footing with citizens of other ground for the discrimination, and are con states, so far as the advantages resulting strained to hold that it is an unwarranted from citizenship in those states are condenial to the citizens of Connecticut and cerned.” And in Ward v. Maryland, 12 New Jersey of the privileges and immuni
Iall. 118, Justice Clifford said that this ties enjoyed by citizens of New York."
clause of the Constitution “plainly and unThe Court in this argument, with which
mistakably secures and protects the right we fully agree, fails, however, to meet the
of a citizen of one state to be exempt from
any higher taxes or excises than are imargument of the New York authorities that
posed by the state upon its own citizens.” these citizens of Connecticut and New Jersey, for whose interests the Court is so much
Of course we are bound to realize the
difficulties of laying an income tax equally concerned, may be deriving other income
upon residents and non-residents alike. from property or business in other states
The only safe rule, however, is to permit on which they are not taxed and which
the non-resident to "enjoy” the same priv. may equal or exceed the exemption al
ileges as a resident, if he wishes to do so, lowed in New York. To this argument the
or in the alternative to tax the income of Court simply says that "it would be rash
property in the taxing state without referto assume that non-residents taxable in
ence to income deductions or exemptions New York under this law, as a class, are allowed to residents in respect to income receiving additional income from outside derivable from sources outside the taxing sources equivalent to the amount of the ex- | state which are concededly not taxable.
NOTES OF IMPORTANT DECISIONS. | ties hereto that they, nor any of them have, or
can have any property rights, or money interests in said business other than that herein
specified and defined, and any sum of money THE RIGHT TO ENFORCE AGREEMENTS | paid to or for any party hereto shall be in full
of the interest of said party in said business." TESTAMENTARY IN CHARACTER.--The idea which appellate courts sometimes have of their When one of the brothers died, his widow duty in rendering a decision seems to be to reach demanded her distributive share in the moiety what the court regards as a "just result" with of the real estate that had been accumulated out regard to the logical application of legal which she contended belonged to her deceased principles or controlling precedents. This husband. The Court at first approached the criticism we believe can be justly made of the subject on the theory that a joint tenancy had Supreme Court of Iowa for its decision in the been created. After an academic review of the recent case of Fleming v. Fleming, 174 N. W. history of joint tenancies and the hostile attiRep. 946, where the court holds that a contract tude of courts and legislatures to this form of between four brothers to enter into a business interest in real property the opinion properly relation and to invest the profits of the busi concludes that this contract did not create a ness in property to be held by them jointly and joint tenancy. There can be no doubt that no providing that on the death of any of them the | estate in joint tenancy was created since no entire property shall belong to the survivors, property was conveyed nor at the time of the does not deprive a wife of one of the deceased agreement did any of the parties own any propbrothers of her distributive share in the prop erty. A joint tenancy can only be created by a erty thus accumulated. While we believe that conveyance in praesenti in which must be presunder the law and the evidence the Court in ent the four unities of interest, time, title and this case reached a wrong result, our main possession. criticism is of the unscientific approach of the
The Court then comes to the conclusion that Court to a consideration of the points involved
a partnership was entered into by the four in the case and of its discoursive and academic
brothers. Whether this was true or not was discussion of principles having no bearing upon
immaterial but even on this theory the Court the problem involved. The following was the
was in error in regarding the heirs of a partcontract which the Court was called upon to
ner as entitled to any interest in the real es. construe:
tate belonging to the partnership. Under the “Know all men by these presents that we,
most favorable decisions, the heirs of a part. Robert J. Fleming, Charles Fleming, John A. ner are only entitled to the share of a partner Fleming, and Stanhope Fleming, of the city of ancestor in the proceeds after an accounting Des Moines, State of Iowa, in order to provide
and by the rule of equitable conversion, in some for the future uninterrupted prosecution of the business of life insurance in which we are now
states, such proceeds (usually cash) will be reor may be hereafter engaged and mutually asso | garded as realty in the proportion that such ciated, and to fix and determine the interests assets are the result of the sale of real property of each therein, hereby mutually agree, and bind
belonging to the partnership. ourselves, our heirs, executors, administrators or survivors and all other persons, that, each The Court then undertakes to make an emoof the parties to this stipulation and agreement,
tional appeal in behalf of a wife so cruelly deshall have only such share of, and interest in the profits, earnings and income of the business
prived of her interest in her husband's estate of life insurance in which we are or shall be by such a contract. “Under our law," says the jointly engaged, as shall be actually received Court, “the wife, the weaker vessel, the one who by each or paid upon the order of each, with the
maintains the home and rears the children, is consent of the others, from the income of said business. And such amount so paid shall fully
entitled to have provision made for her, if represent the share and interest of each of the peradventure, death robs her of the one legally parties hereto, at any time while we, the un and morally pledged to support and maintain dersigned, shall be associated together in said
her. She is entitled to share in such of his business or thereafter. Upon the death or withdrawal of any party hereto, all his interest
estate as by his efforts he accumulates and in said business shall thereupon cease and de leaves at his death. The husband cannot take termine and at no time shall any accounting be this from her by any testamentary disposition. made or required to be made by any party
He cannot contract with her for its release. bereto, his representatives, executors, heirs or survivors, or any other person claiming under
In view of the legal status of the wife, in view him, or to any person, officer or representative of the relationship which she sustains to her upon any basis of labor performed or money husband, in view of those provisions of statute received on account of said business by any of
tliat protect and guard her interest during his the parties hereto or otherwise. And it is dis. tinctly understood and agreed between the par. I life and after he is dead, it would seem to be against the policy of the law, expressed in the | of plaintiff's husband, it would not for that statutes, to permit men to legally get together reason necessarily have been invalid for such and agree with each other that, upon their a contract, in equity, if made for a valuable death, their wives and children shall receive consideration fully performed on the part of no portion of the estate which they spent their the other contracting party is valid. Take the lives in accumulating. It is a clear fraud on familiar case of an agreement to devise all the marital rights of the wife. Many a wife has one's property to one who agrees to take care been a faithful helper in the building of great of the deceased during his last illness. Such fortunes. Many a wife, by economy and self a contract if performed on the part of the one denial, has been a strong factor in the building. agreeing to render the services will be enforced Yet we are asked to say that this wife, who has in equity and a will made in pursuance of such done faithful service and practiced self-denial a contract is "irrevocable,” according to Mr. for 36 years that something might be left for Schouler. Schouler on Wills (5th Ed.) Vol. 1, declining years, must be left penniless."
Secs. 452, 453, citing many cases. So, even reThis appeal by the Court touches our sym.
garding this contract as being in the nature of
a testamentary disposition, there can be no obpathy but has no place in a serious considera
jection to an agreement providing that after tion of the legal rights created by the con
one's death his property shall belong to the tract herein involved. Here there was no prop
other contracting party. The property under erty of the husband sought to be conveyed for
the contract was the product of the labor of the purpose of defeating the wife's interest.
the other contracting parties who may have The contract referred to property to be ac
conceivably entered into it and contributed the quired as a result of the labors of four men who
labor of a life time only on the theory that agree with each other as to the interest each
they would be entitled to the share of the should have in the property thus to be accu.
others. A contract is void as a testamentary mulated in the future. We know of no rule of
disposition only when it is in the nature of public policy which restricts contracting parties
a gift, not where it is the consideration for from defining their interests to property which
services or property received by the party 50 may or may not come into existence in the
disposing of his property after death. future. In some forms of insurance contracts many of the policy holders are by the terms But it seems to us that this contract should of their mutual contracts entitled to certain ad
properly be regarded as a contract defining ditional rights by virtue of the fact of survivor.
the interest of the parties in property to be ship. These benefits accrue in the nature of in. | accumulated in the future and we know creased dividends. In certain forms of tontine of no rule of law which prevents parties policies rights accrue only on the basis of
from defining their respective interests in propsurvivorship and at the expense of those who erty thus to be acquired or produced by their die before a certain time.
joint efforts. In thus defining their interests in The fact that survivorship is no longer re.
such property they may properly provide that garded as an incident of joint tenancy does not
their several interests shall be for life with make invalid contracts definitely, providing
the fee contingently in the survivor. Under the that future rights of the contracting parties
contract in the present case it was specifically shall be based on the fact of survivorship. In
provided that none of the parties thereto had 17 Am. & Eng. Ency. of Law, p. 650, it is said:
any "property rights" in the property "other "Although the right of survivorship as an in
than that herein specified and defined." It is, cident to joint tenancies be abolished by stat
therefore, an improper interference with the ute, it may nevertheless be given by will or
right of contract for a Court to take the propdeed, either expressly or by necessary implica
erty contributed and accumulated by the other tion. Nor does such a statute prohibit contracts
contracting parties and give it to those who making the rights of the parties dependent
have no right to it under the contract and thus upon survivorship." See also Taylor v. Smith,
deprive the other parties to the contract of the 116 N. Car. 531; Pritchard v. Walker, 22 Ill.,
promised reward after they had fully performed App. 286; Jones v. Cable, 114 Pa. St. 586.
the contract on their part. The real objection to this contract which It is in keeping with the superficial charthe Court might have pressed with more vigor acter of the Iowa Court's consideration of the than it did, was that it amounted to a testa. problem involved in this case that they should mentary disposition of property by deed inter fail to have observed the application of a con. vivos. But even if this contract were construed | trary principle, announced by them just six as a testamentary disposition of the property | months before in the case of Stewart v. Todd, 173 X, W. 619. In that case a husband and wife the article purchased below a price fixed for entered into a contract to conduct a business as resale of the article. The subject is also cor. a partnership in which certain provisions were ered by the Sherman and Clayton Acts which practically identical with the case at bar. In have been construed as prohibiting restrictions this contract the parties provided that “all the
on resale of patented articles. Boston Store property accumulated, purchased, and owned
V. American Graphaphone Co., 246 U. S. 8, by either party to be in the firm name. Both
38 Sup. Ct. Rep. 257. But all contracts prohibparties to use any money they need, and at
iting price cutting are not against public policy the death of either party the one living shall
and the distinctions to be observed in this fulfill all contracts, pay all debts, and have all property left or owned by either party, or in
respect are made clear by the Vice Chancellor the firm name.”
of New Jersey in the recent case of Ingersoll
& Bro. v. Hayne & Co., 108 Atl. Rep. 128. The contract in the Stewart case was clearly a testamentary disposition, but the Court upheld
The complainant, a manufacturer of cheap the contract in favor of the surviving husband
watches, asked that the defendant be restrained as against the wife's will which attempted to
from re-selling complainant's watches known as devise her share of the property, which was largely real estate, to certain of her relatives.
“Yankee Watches" for less than $1.35 each. The In this case the Court properly ignored the ques
theory of the suit was not that complainant tion whether a partnership had been created for
desired to interfere with the property right the obvious reason, as the Court states, that the
of the defendant but that he wished to protect rights of the parties do not arise out of the
his trade name “Yankee Watch.” He offered partnership relation but out of the specific pro to permit defendant to purchase the identical visions of the contract into which they entered, watch without the name, “Yankee Watch," and which provided that property to be accumulated sell it for what he wished. The Vice Chanby their joint efforts should belong to them as cellor in sustaining the defendant's bill said: partners while they lived and go to the survivor on the death of either. In answer to the objec
"It is also well recognized that a person has tion that such a contract was an attempt to a property interest in his trade-name and good make mutual wills, the Court said:
will, and will, even in the absence of statute, be
protected against injury to that trade-name and "It is true that as a testamentary instrument good will. This right has in this state been it cannot be enforced, but an agreement to as above indicated recognized by statute. Since leave property to another, resting upon a con the opinion of the Supreme Court in Standard sideration, is valid and binding, and will be Oil Co. v. United States, 221 U. S. 1, 31 Sup. enforced by the courts."
Ct. 502, 55 L. Ed. 619, 34 L. R. A. (N. S.) 834,
Ann. Cas. 1912D, 734, it has been recognized In Carmichael v. Carmichael, 72 Mich. 76, 40 that the Sherman Act July 2, 1890, c. 647, 26 N. W. 173, 1 L. R. A. 596, 16 Am. St. Rep. 528, Stat. 209 (U. S. Comp. St. $$ 8820-8823, 8827
8830) and Clayton Act Oct. 15. 1914, c. 323, 38 the same result was reached. In this case the
Stat. 730, must be construed in the light of Court held that:
reason. To say that Congress intended to pro
hibit an act which had the effect of stimulating “Where husband and wife bind themselves to
interstate commerce and stimulating competimake a particular disposition of their prop
tion rather than putting a restraint upon either erty by will, and such contract is fully per.
is, I think, to state an absurdity. The proofs formed on the part of the husband, and the
before me demonstrate that, if defendant and benefits received and accepted by the wife,
others are permitted to pursue their practice equity will prevent the wife from violating her
of price cutting, the business of complainant part of the contract in fraud of parties inter
will be ruined and thereby the volume of interested, and that, if a conveyance is made by her
state trade be reduced, or a method of distribuafter the death of her husband in violation of
tion will have to be adopted which will greatly her agreement, the conveyance may be set aside
increase the price to the consumer, which will at the suit of the parties for whose benefit the
necessarily result in reducing the volume of agreement was made. See, also Teske y. Ditt
interstate traffic; that in either event compe. berner, 70 Neb. 544, 98 N. W. 57, 113 Am, St.
tition will be effectively reduced." Rep. 802."
The Chancellor also called attention to the RESTRICTIONS UPON RESALE OF AN fact that such a use of the trademark of a ARTICLE TO PREVENT PRICE CUTTING.
well known manufacturer is a fraud upon the There have been many decisions and much public. The Court asks why retailers desire argument over the question of the right of a | to sell a certain trade-marked article at or merchant to impose such restrictions upon his below cost and answers his own question. "So vendee as will prevent the latter from selling I that retailers," says the Court, “may make