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case of personal property he really only gets

tematic effort has been made by the Amerithe balance, with a credit as a matter of convenient bookkeeping to the amount of the tax. can Bar Association, through its Committee In the case of real estate he receives, properly

on Uniform Judicial Procedure, to bring speaking, an equity. He can pay the tax and get the land freed from the incumbrance, or the about a general uniformity in federal and State can foreclose the lien and he will receive

state procedure by an amendment to the the balance. In either case the only natural way to treat him is as a recipient of a net statutes of the United States, which would amount. The condition of the devolution of the

give to the Supreme Court the power to property is the receipt of the transfer tax by the State."

make rules of practice in cominon-law proThis decision, it seems to us, is not only logi.

cedure, as it has already done in equity. cal but eminently fair. It would be ridiculous

Repeatedly the bill has reached late stages to exempt a legacy or devise in the computation of one's income and then permit the legatee or

in Congress, only to be laid over because of devişee to deduct from other income the tax the objection of a Senator or Senators who paid on such legacy or devise. The decision is are unconvinced by the authority of the also in accord with the decision of the U. S.

most respectable associations, including the Supreme Court in the case of United States v.

American Bar Association and the State Perkins, 163 U. S. 625, at p. 630, where the court

Bar Associations of New York, Massachusaid:

setts, Alabama, Oregon, Maryland, Missis“The legacy becomes the property of the United States only after it has suffered a dimi | Sippi, South Dakota, Pennsylvania and nution to the amount of the tax, and it is only

many others (46 in all), as well as the Naupon this condition that the Legislature assents to a bequest of it."

tional Conference of Commissioner's on Uniform State Laws, and eminent teachers

from the leading law schools. It should be IS CONGRESS OBSTRUCTING RE

obvious that if a simple and elastic set of FORM IN TUDICIAL PROCE

rules governing and completing a procedure DURE?

were formulated and put in force in all of Inquiry is not infrequently inade of us the federal courts, it would not be long beconcerning the failure of the bills in Con

fore, by reason of their intrinsic exce'lence, gress to give the Supreme Court of the they would be adopted under authority of United States power to make rules of the necessary legislation by the state courts. pleading and practice governing the law But it is held up by those who seek to reside of Federal courts. Some inside in form the practice of our courts on a theory formation was given concerning the attitude which is directly contrary to the spirit of of Congress toward these measures by Hon. our constitutional tripartite division of the Walter George Smith of Philadelphia, functions of government, a spirit vzhich is former president of the American Bar As imbued with distrust of the judicial departsociation, in an address before the Cali ment and presses against it to the very fornia Bar Association on June 7, 1918. We

verge, if not beyond, of unconstitutional quote what Mr. Smith has to say on this

legislation. It is the spirit which would, subject :

if possible, concentrate in the Legislature "The reproach of an undue conservatism

all of the powers of government and make directed against our profession has been to

it submissive to the emotions of the popusome extent deserved in the past, but that there is among the great majority of law

lace rather than the delegated authority to yers an earnest desire to meet the evident

speak for it with measured and dispassionneeds of a readjustment of practice and

| ate judgment. Instead of giving to the procedure will be evident to anyone who

courts the full responsibility to which, unskims the pages of the reports of the na

of the reports of the na- | der the law, they are always to be held to tional, state and local Bar Associations a strict account, harassing obstacles are throughout the country. Since 1912 a sys- | sought to be thrown in their way and in-'

sidious efforts to undermine their power question, the case cannot be considered a
are incessantly made by uneducated or | strong authority.
prejudiced people who fail to find the safe Į The averments which were considered
guard of constitutional democracy in the sufficiently specific to enable the pursuer
strength of popular confidence in the courts to a proof were to this effect—that the de-
as the oracles of justice." A. H. R. fender made no inquiry regarding the truth

of the statements complained of; he had no

precognition on which to base his allegaSOME RECENT DECISIONS IN THE

tions; he led no evidence in support of BRITISH COURTS.

them; he did not believe in their truth and

never intended to establish any of the stateA litigant, and especially one who is de- ments complained of; they were put on fending himself, is entitled to state in de record, not with the view of maintaining fense everything which is pertinent to the | his defense, but for the oblique purpose of issue raised by the pleadings. If what is intimidating the pursuer and compelling stated in defense is pertinent to that issue him to abandon his action rather than aland especially if it is relevant thereto, the low the statements to be widely circulated litigant is presumed to have acted in bona and made the subject of public comment. fide and in pursuance of his undoubted These averments were as above stated held right and privilege to defend himself from to be of such a character as to entitle the attack. The occasion, in short, is one which pursuer to the opinion of a jury. is highly privileged and in which the liti- Britain Steamship Co. v. The King” was gant will be completely protected unless it a Petition of Right against the Admiralty be clearly and specifically averred and brought with the object of determining the proved that he was actuated by malice in respective liability of the Crown and the making the statement. If the statement underwriters in certain classes of losses complained of is manifestly impertinent to during the war. During the war British the issue raised by the pleadings the occa- ships were usually protected against loss in sion is not privileged; the case is then one two ways, by an ordinary policy of marine of ordinary slander in which no privilege is | insurance in the case of "sea risks,” and enjoyed by the defender and in which he is by the Crown-either by special policy or presumed to have acted maliciously. These otherwise, according to the relationship of general principles have been so well estab the ship to the Government service-against lished that we rarely meet with an action risks arising out of "warlike operations.” of judicial slander, such as was before the In a large number of cases, however, the court in Mitchell v. Smith. In defense to loss has been due to some cause which is an action for breach of contract the defend- / at once a “sea risk” and connected with er made averments of fraud in consequence "warlike operations," and the question of of which the slander action referred to was liability in all such cases depends on whethraised. The Lord Ordinary (Anderson) er or not the "warlike operations” were held the action irrelevant, but the First the causa proxima of the sea risk. In the Division, by a majority, held that the aver- case before the court a ship was lost by ments made were relevant to infer malice what unquestionably was an ordinary sea and remitted the case back to the Lord risk. But in fact she was wholly in the Ordinary. The judges composing the ma- service and under the control of the Adjority were Lords MacKenzie and Cullen; miralty when lost, having been requisitioned Lord Sands was the dissenting judge. There by the Director of Transport and chartered being thus two judges on each side of the for Admiralty service. The underwriters

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1919. 2 S. L. T. 117.



1 K. B. 575.

claimed that, as she was completely under company is repudiating any liability under Admiralty control for war use, “warlike a contract but accepts the existence of the operations” must be held to be the causa contract as a binding contract, then arbiproxima of any and every sea risk and loss tration (assuming a clause of reference to she might suffer. This is arguable enough arbitration is in the contract) is the proper in view of the long line of cases where remedy and excludes action. In Woodall's stranding or collision of a ship obeying the case the court put the question, under which directions of a convoy has been held to be of these two cases the question before them the result of "warlike operations,” but the fell and as stated they held that it was court refused to give so wide an extension governed by Stebbing's case and found in to a doubtful principle, and held that the favor of arbitration. operations were not the causa proxima of

DONALD MACKAY. the loss.

Glasgow, Scotland. We would call attention to the decision of the Court of Appeals in Woodall v. Pearl Insurance Co. Ld. It was an action for recovery of insurance money and the policy CHANGE OF RATES OF PUBLIC contained the usual clause of reference to UTILITY WHICH HAVE BEEN arbitration. The company had refused to FIXED BY FRANCHISE ORDIpay on the grounds that the assured had NANCE. misstated his occupation or in any event jad changed his occupation during the continuance of the policy without informing Preliminary.-Within the past two years the company; and also on the case coming many public utilities have, because of the into court, the company pleaded that the increased cost of labor and war-time prices, action was excluded by the arbitration applied for increase of rates and resistance clause. The court held that arbitration was thereto has been made upon the ground that a condition precedent to action, that is, to grant such increase would be an impairthey decided that the merits of the claim ment of the obligation of contract forbidshould be submitted to arbitration and den by the Federal Constitution. This rethereafter if necessary the amount award sistance has been ruled upon variantly by ed in the arbitration could be sued for. the courts, some of them distinguishing be

The case is of special interest in relation tween a municipality granting rights upon to two other important cases of arbitration

a condition precedent and that arising out clauses in contracts, which are referred

of private contract. Incidentally the questo in the judges' opinions. The first of

tion of a long term arrangement with a these,* decided that where a person or an

municipality and that for a definite but insurance company is repudiating a con

brief term. The effect of the state's police tract in the sense that it is disputing the power has been alluded to in practically existence of any binding contract at all,

all of the cases. then the whole contract is involved and Rates in Private Contract and in Franeven though the contract contains an arbi- | chise.—The Supreme Court, in a case tration clause action in court, not arbitra where a corporation had a contract with a tion, is the proper remedy. The other cases public service corporation to supply it with decides that where a person or insurance electric light and power at a certain rate contract. The court said, citing Manigault are held subject to its fair exercise," exv. Springs, that “It is the settled law of cerpt from a former decision." this court that the interdiction of statutes

for a term of five years and during said. (3) 1919. 24 Com. Ca. 237. (4) Jureindini v. National British and Irish

term the railroad commission of Georgia Insurance Co., 1915 Appeal Cases 499. authorized an increase in rates, held the (5) Stebbing v. Liverpool and London and

3I public service corporation not bound by its Globe Insurance Co., 1917. 2 K. B. 433.1 Puun scvice Corporation not bou

Later than all of the cases above spoken impairing the obligation of contracts does

of is a decision by the U. S. Supreme not prevent the state from (properly) exer

Court, which held, that, where a municipal cising such powers * * * for the general

ordinance granted a street railway a frangood of the public though contracts pre

chise which obligated the railway to give viously entered between individuals may

service at a certain rate for fares, that this thereby be affected.” And further, quoting

constitutes in Ohio an absolute bar against from Louisville & N. R. Co. v. Mottley,' it

any change of rate, one party thereto obwas said that “Contracts must be under

jecting. There is not in the opinion in this stood as made in the rightful exercise of

case any reference whatever to the case the rightful authority of government, and

in 248 U. S. 60, nor to any of the cases no obligation of a contract can extend to

it cites, and both opinions were by a unanthe defeat of legitimate government au

imous count. As this opinion appears to thority.” This was stated as to a contract

distinguish between private contract rates lawful when made, but made unlawful af

and franchise rates, in their alterable efterward under interstate commerce clause, but it would seem to be equally true under

fect, it becomes necessary to examine more

particularly the exact purport of the latrightful exercise of a state's police power.

ter, especially as there are variant rulings A late work by the author of this articles

in state courts as to the effect of a franspeaking of discrimination lawful under

chise in the fixing of rates for public utilone classification at the time it is made,

ities. says: "But no contract can be the basis for such a discrimination, whether prior Particular Bearing of the Columbus or contemporaneous, as it comes under the Case.—Justice Day says: “The insistence power to regulate the utility itself.” There on the part of the city is that, under the are cited in support of this many U. S. controlling laws of Ohio, in force when Supreme Court cases and among them the these ordinances were passed and accepted, Mottley case supra. But it is also clear, , and the terms of the ordinances, binding that the right to disregard the obligation of | contracts were created * * * for the period contract has been expressly declared, when of twenty-five years upon the terms and the exercise of a state's police power is | conditions set forth in the ordinances. *** involved. Thus the opinion in United Dry | Whether these ordinances constituted such Goods Co. case supra, says: “It is settled contracts depends upon the proper conthat neither the 'contract clause nor the struction of the statutes of Ohio in force 'due process' clause has the effect of over at the time, and the terms of the ordiriding the power of the state to establish nances in question.” Then he refers to a all regulations * * *; that this power can prior decision,” wherein it was said: "In neither be abdicated, nor bargained away, reason, the conclusion that contracts were and is inalienable even by express grant; | engendered would seem to result from the and that all contract and property rights fact that the provisions as to rates of fare to alter; that by those ordinances existing others, but these cases do not discuss Ohio rights of the corporations were surren statutes with any fuller particularity nor dered, benefits were conferred upon the make any reference to the abdication or public, and obligations were imposed upon bargaining away of the state's police powthe corporations to continue those benefits er, nor does either of the cases say specifduring the stipulated time. When, in addi- ically that the city might not lower the tion, we consider the specific reference to rates fixed in the district court reviewed. In limitations of time which the ordinances 249 U. S. 399 supra, it is said: "No quescontained, and the fact that a written ac tion is made but that the legislature of a ceptance by the corporations was required, state may, unless restrained by State Conwe can see no escape from the conclusionstitution, contract away this (police) powthat the ordinances were intended to be er, either by an enactment of its own or agreements binding upon both parties def- by delegating to the municipality power initely fixing the rates of fare which might to do so. The Milwaukee caselo only holds thereafter be charged.” A critical analysis that * * * it did not clearly and unmistakof this statement presents only a single

| were fixed in ordinances for a stated time (1) Union Dry Goods Co. v. Ga. Public Seryice Corporation, 248 U. S. 372, 39 Sup. Ct. 117,

{ and no reservation was made of a right P. U. R. 1919C, 60.

(2) 199 U. S. 473, 50 L. ed. 274, 278, 26 Sup. Ct. (5) Atlantic C. L. R. Co. v. Goldsboro, 232 U. 127.

S. 548, 558, 34 Sup. Ct. 364, 58 L. ed. 721. (3) 219 U. S. 467, 31 Sup. Ct. 265, 34 L. R. A. (6) Columbus Ry. P. & L. Co. v. Columbus, (N. S.) 671.

| 249 U. S. 399, 39 Sup. Ct. 349, P. U. R. 1919D, 239. (4) Collier on Public Service Companies, L (7) Cleveland v. Cleveland City R. Co., 194 $132.

U. S. 517, 24 Sup. Ct. 756, 48 L. ed. 1102.

enly appear that the state had contracted thing to differentiate it from a contract

away this function of government or had between a public utility and a private

delegated to the municipality the power to party, except that benefits were conferred

contract it away.” In the Milwaukee case on the public,and this seems to be said

supra the unanimous opinion was written merely arguendo, and it seems clear that

by the same Justice who wrote the opinion nothing in a private contract could be said

in 249 U. S. 399 supra, and he there said: or agreed to, or any rights surrendered or

"It has frequently been held that where a benefits conferred which could prevent the

statute of a state is alleged to create or exercise of the state's police power there

authorize a contract inviolable by subseupon. It is said, however, that “While the

quent legislation of the state, in determinprecise question was not before the court in

ing its meaning, much consideration is given Interurban R. & T. Co. c. P. U. Comm.* *

to the decisions of the highest court of the * * it is evident that the Supreme Court of

state. Among other cases which have asOhio takes the same view of the effect of

serted this principle are Freeport Water such ordinances as was declared by this

Co. v. Freeport, 180 V. S. 587, and Vickscourt in the Cleveland case.” In that case

burg v. Vicksburg Water Co., 206 U. S. the U. S. Supreme Court speaks of the view

496, 509."'11 But in 249 U. S. 399 supra, the by Ohio courts that there arose under or

court appears to take as conclusive the view dinances by an Ohio municipality binding

of the Ohio courts that its statutes did incontracts, but statutes of Ohio are not spe

tend to surrender the state's police power cially discussed except to show that "there

in granting to municipalities the power to was lodged by the Legislature of Ohio in

make binding contracts with a street railthe Muncipal Council of Cleveland compre

ways. hensive power to contract with street railway companies in respect to the terms and

State Decision That Intent to Surrender conditions" upon which they should operate, but there is no specific direction that

Police Power Must Be Clear.—Pennsylthe state's police power in this respect

vania Supreme Court, after stating that might be abdicated or bargained away. The

private contracts with public service comCleveland case supra was succeeded by

bţ | panies are made upon the presumption of

(8) 98 0. St., 120 N. E. 831, P. U. R. 1919, B212.

(9) Cleveland v. Electric Ry. Co., 201 l". S. 529, 26 Sup. Ct. 513; Cleveland Elec. Ry. Co. v. Cleveland, 204 U. S. 116, 27 Sup. Ct. 202.

(10) Milwaukee Elec. R. Co. v. R. Comn., 238 T. S. 174, 35 Sup. Ct. 8 20.

(11) Columbus R. P. L. Co. v. Columbus, 253 Fed. 499.

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