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66. Mortgages-Future Advances.-Mortgage for obligatory future advances has priority of subsequent mortgage recorded before future advances paid.- Kuhn v. Southern Ohio Loan & Trust Co., Ohio, 126 N. E. 820.
67.— Parol Evidence.—That a deed was intended as a mortgage can be shown by parol.Manahan v. Aumiller, Wash., 188 Pac. 789.
76.– Satisfaction of Seller. - Where seller contracts to deliver goods and allow credit for an agreed term, and reserves right to withdraw credit and demand cash payment or security before shipment of goods, if buyer's financial responsibility becomes unsatisfactory, that ques. tion is to be settled by seller before he parts with goods; but there must by a real want of satisfaction with buyer's financial responsibility, and the refusal to ship without payment or security must be based solely on that groundCorn Products Refining Co. v. Fasola, N. J., 109 Atl. 505.
68. Negligence Unsafe Structure. Where a veneered brick wall of a building had been condemned by city authorities as being unsafe, and the defendant owner had full knowledge thereof, and where it was not shown that the plaintiff knew of the defects, the defendant's negligence in allowing it to remain in an unsafe condition was actionable at the suit of plaintiff, who was injured by its fall while rightfully on the premises (per Christianson, C. J., and Birdzell, J.)Larson v. Russell, N. D., 176 N. W. 998.
77.- Warranty of Quality. - Warranty of quality must be substantially complied with.John A. Crowley Co. v. Clark Equipment Co., U. S. C. C. A., 263 Fed. 58.
69. Nuisance--Sic Utere Tuo.-Where, in spite of precaution taken in operation of stone quarry and rock crusher, rocks escaped and were thrown against plaintiff's house, and the concussion from blasting was so violent as to shake the house, and dust from the crusher and elevator entered the house in such quantities as to render it unfit for habitation, a nuisance exIsted.-Fagan v. Silver, Mont., 188 Pąc. 900.
78. Specific Performance-Pleading and Proof. --In a suit for specific performance of an agreement by persons capitalizing a corporation to give stock to the persons inducing them to do so, want of consideration was available as a defense, though not pleaded.-Plains Iron Works Co. v. Haggott, Col., 188 Pac. 735.
70. Partnership — Accounting. — One partner cannot sue the other at law until after a full accounting and balance struck, which accounting is an action on contract, and not ex delicto. -Bertozzi v. Collaso, Ariz., 188 Pac. 873.
79. Vendor and Purchaser-Estoppel.-A party to a contract cannot insist on the performance of current condition, such as the payment of taxes, and thereafter repudiate the contract for a prior breach of which he must have known.-Mikusch v. Beeman, Wash., 188 Pac,
80.--Executory Contract.-A party in possession of land on an executory contract to purchase it cannot while retaining possession refuse, because of fraud, to make the payments provided by his contract. — Hyman v. Harbor View Land Co., Cal., 188 Pac. 828.
71.— Dissolution. — Though the term for which a partnership was originally formed had expired, and it was therefore terminable at the will of either party, it was not dissolved as a matter of law by one of the parties ceasing to give his personal services to the partnership as he had therefore been doing for an agreed salary, where his capital and accumulated profits remained in the business, and the other partner never proposed an actual termination of the partnership, and nothing was done towards withdrawing the capital of the partner in question.-Lewellen v. Thomas, Iowa, 176 N. W. 964.
81. Wills-Intention. – Testator's intention expressed in will must prevail.-Rewis v. Rewis. Fla., 84 So. 93.
72. Principal and Agent — Ascertainment of Authority.- Persons dealing with agent must ascertain authority and have burden of proof.Kelly v. Pelt, Tex., 220 S. W. 199.
82.- Interest on Legacies.—Where will directed life tenant to pay certain legacies within specified time, it will be assumed in the absence of anything to the contrary, that testator intended life tenant to pay interest, upon failure to make payment of legacies within required time.-Security Sav. Bank v. Williams. Iowa. 176 N. W. 971.
73.- Undisclosed Principal. — No recovery 83.- Spendthrift Trust. — Spendthrift trust against undisclosed principal on negotiable in- held burden only on property given to trustee strument.-Negociacion Agricola y Ganadera de and not on entire estate.-Phillips v. Phillips, San Enrique, S. A. v. Love, Tex., 220 S. W. 224. | Ark., 220 S. W. 52.
Central Law Journal.
What is an income tax? Is it a tax in rem or a tax in personam? In the principal
case the Court calls it a property tax, but ST. LOUIS, MO., JUNE 18, 1920.
declares the property to be in the nature
of an equitable interest in the beneficiary CONSTITUTIONALITY OF TAX ON INCOMES
to the income of the trust fund. The situs FROM SECURITIES HELD IN TRUST
of such income' is therefore at the situs of OUTSIDE THE STATE.
the owner of the income, to wit, at the latThis is the open season for taxing in
ter's domicile. In the Shaffer case the comes. Everybody is doing it and it is a
Court held that the income was a part of very remarkable income which is able suc
the corpus or principal from which it was cessfully to run the gauntlet of the tax
derived, and was properly taxed at the gatherer today. And the Supreme Court in
place where the capital was invested. Both the recent case of Maguire v. Trefry, 10
chese theories cannot be true and it is inSup. Ct. Rep. 417, has encouraged the tax
cumbent on the Supreme Court to adopt hunters in their search for more game. In
one or the other theory in order that inthat case the Court held that the section
come derived from sources outside the state of the Massachusetts law taxing the income
may not be subjected to greater burdens of a resident of the state derived from a
than incomes derived from investments trust administered under the laws of an
within the state. other state in securities in the possession of | It is our opinion that the theory in the the trustee in such other state does not deny present case is preferable to the opinion due process of law in violation of Const. in the Shaffer case. The income tax is not U. S. Amend. 14, as subjecting to taxation a tax on the corpus of the estate, but on the property beyond the limits and outside the income after it has been separated from the jurisdiction of the state, as the beneficiary principal. It is only an individual that can has an equitable right, title and interest, have an income. An oil well cannot make distinct from the legal ownership.
a profit, but an oil company or an oil well Tax laws are proverbially illogical in owner can. This distinction was made the principles governing their construction. many years ago of an earlier income tax The Dr. Jekyl and Mr. Hyde effect of all by Chief Justice Shaw in Bates v. Boston, other tax laws is rapidly becoming the
15 Cush. (Mass.) 93, where he said: chief characteristic of the state income tax "The assessment does not touch the laws and the Supreme Court is kept busy fund, or control it; nor does it interfere jumping from one principle to another in
with the trustee in the exercise of his
proper duties ; nor call him, nor hold him, the effort to sustain such laws. Income is
to any accountability. It affects only the called property in one case and taxed as be
income, after it has been paid by the truslonging to the owner at his domicile. That | tee to the beneficiary.” is the position taken in the principal case. We are seeking by this suggestion to inIt is next considered as a part of the cor duce the Supreme Court of the United pus, or principal or which it is a product, States to adopt some definite theory of inand therefore taxable in the state where the come taxation so as to avoid the injustice capital is invested. That was the decision of double taxation which disgraces every in the recent case of Shaffer v. Carter, 40 other form of taxation. We are aware of Sup. Ct. 221, where the income from an oil the many decisions of the Supreme Court well in Oklahoma belonging to a resident of which have permitted the same property to Illinois was held to be taxable in Okla be taxed under different theories in differhoma.
| ent states. We are aware of the fact that
intangible property can be taxed as a debt of each beneficiary in the net income of the in one place, a credit in another and even trust should not be taxed both at the domias tangible property in the place where the cile of the trustee and at the domicile oi evidences of such property are deposited. the cestui que trust. We are aware of the plausible argument advanced to sustain each form of taxation,
We believe that the Supreme Court that the individual or the property is pro
should extend to choses in action the just tected and his right to enforce his rights
| and logical principle declared in the case
of Union Transit Co. v. Kentucky, 199 guaranteed by the state which has a right
U. S. 194, 26 Sup. Ct. Rep. 36, wherein to tax him for the benefits conferred. But
it was held that tangible personal propthis reason is more plausible than real. It presupposes that we are still only a loose
erty, permanently located in another state bundle of separate jurisdictions instead of
than that of the owner--where it had ac
quired a situs, and was taxed irrespecone great nation. State boundary lines
tive of the domicile of the owner-was should not be permitted to work an injustice upon citizens of the United States
beyond the taxing power of the state,
and that an attempt to tax such property which is not suffered by the citizens of any
at the owner's domicile was a denial of due other nation.
process of law under the Fourteenth We are not opposing the right of the Amendment. state to enforce different tax assessments
In the Union Transit Company case the upon the same property; we are objecting
Supreme Court exposed the unreality of to the unnecessary and unjust theory that the old fiction masquerading as a miximas between the states of the Union, the | mobilia personain sequuntur"--and fixed same property can have a situs in two or the situs of tangible personal property at three states for purposes of imposing the place of its actual situs. Now let the the same tax. If a corporation in Chicago Supreme Court do the same thing for inearns one million dollars and a stockholder | tangible personal property. Let the Court living in Indianapolis receives a dividend declare the situs of a chose in action for therefrom amounting to one hundred thou purposes of taxation, or, if you please, for sand dollars, there is no valid objection to all purposes to be at the domicile of the an income tax being levied on the income of owner. Business demands and is entitled the corporation and also upon the income to a clear decision on this point. Ii of the stockholder, although in effect it A of Louisville owes B of Cincinnati amounts to doubie taxation. This kind of $500 on a note payable to a bank in New duplication cannot be prevented where the | York and the note is deposited with other same property takes different forms. But securities with a bank in Chicago, it is it does not seem logical or fair to tax the in ridiculous to say that the $500 can be taxed come of the corporation at Chicago and in Kentucky, Ohio, New York and Illinois. the income of the stockholder both at Chi- | And now comes the income tax on the incago, the source of the dividend and also terest. Where shall this be assessed? Shall at Indianapolis, the domicile of the stock | the same old injustice be wrought and the holder. And this injustice is more appar same old fallacies be brought forward in ent, it seems to us, in the case of incomes justification as in the case of other intangiderived through trustees. If the trustee is ble property? Choses in action represent engaged in an active business for the bene- | the bulk of the wealth of the country today ficiaries, his income as trustee might prop- and their situs for all purposes should be erly be taxed at his residence, but the share ! definitely determined.
NOTES OF IMPORTANT DECISIONS.
an entirely fanciful and arbitrary design or seal, to which the Commissioner found the
applicant had the exclusive right. Since the TRADE-MARKS CONSISTING IN PART
proviso prohibits the registration not of mere
ly descriptive words but of a “trade-mark OF DESCRIPTIVE WORDS MAY BE REG
which consists * * * merely' (only) of such ISTERED WHEN ACCOMPANIED BY DIS words—the distinction is substantial and plain CLAIMER.—The Supreme Court has corrected -we think it sufficiently clear that such a an unwarranted practice of the Patent Office in composite mark as we have here does not fall
within its terms." refusing to register trade-marks which contained words descriptive of the goods or de. Previous to the decision of the Court of vices represented by the trade-mark. Estate | Appeals denying registration to any tradeof Beckwith v. Commissioner of Patents, 40
marks containing any matter which was mere. Sup. Ct. Rep. 414.
ly descriptive, it was the custom of the Pat
ent Office to register such trade-marks on peIn the Beckwith case the plaintiff sought to
titioner filing a disclaimer as to the purely register a trade-mark in the form of a seal
descriptive matter. This practice, although uncontaining the face of an Indian in the center,
authorized by statute, is commended by the Su. with the encircling words, "Round Oak Moist
preme Court in the following terms: air Heating System.” This was enclosed in a circular border of oak leaves. The Commis
“While there is no specific provision for dissioner found that the trade-mark was law
claimers in the trade-mark statute, the prac
tice of using them is commended to our judg. fully registrable except for the words, "Moist
ment by the statement of the Commissioner of air Heating System,” which petitioner was re. Patents that, so far as known, no harm came quired to delete before the Commissioner would to the public from the practice of distinguishregister the trade-mark. The Court of Ap
ing, without deleting, nonregistrable matter
in the drawing of the mark as registered, peals sustained the Commissioner of Patents
when a statement, forming a part of the recbut were in turn reversed by the Supreme
ord, was required that the applicant was not Court.
making claim to an exclusive appropriation
of such matter except in the precise relation The Court of Appeals based its decision on
and association in which it appeared in the Section 5 of the Trade-mark Registration Act
drawing and description. It seems obvious which reads as follows:
that no one could be deceived as to the scope
of such a mark, and that the registrant would "Provided that no mark which consists * * *
be precluded by his disclaimer from setting merely in words or devices which are de
up in the future any exclusive right to the scriptive of the goods with which they are
disclaimed part of it." used, or of the character or quality of such goods, * * * shall be registered under the terms of this act." .
ARE NON-RESIDENTS' ENTITLED TO The Supreme Court calls attention to the
EXACTLY THE SAME ACCESS TO COURTS fact that this section of the trade-mark law AS ARE RESIDENTS?—No provision of the is only declaratory of the rule previously an. Constitution is more necessary to the preserva. nounced by the Court. After citing many
tion of national unity than Article 4, Section 2, authorities to prove the older rule, the Court
providing that citizens of each state shall said:
be entitled to all privileges and immunities "Thus the proviso quoted, being simply an
of citizens of the several states. In the cateexpression in statutory form of the prior gen gory of rights protected by this provision of eral rule of law that words merely descrip the Constitution is the right of a non-resi. tive are not a proper subject for exclusive
dent to enter the courts of a state on the trade-mark appropriation, if the application in this case had been to register only the
same terms substantially as residents. But words 'Moistair Heating System,' plainly it in a recent decision the Supreme Court has would have fallen within the terms of the held that this does not mean that a nonprohibition, for they are merely descriptive
resident is entitled to exactly the same rights as of a claimed property or quality of the peti
residents, but simply that the terms on which tioner's heating system-that by it moisture is imparted to the air in the process of heat they may enter the courts shall be adequate. ing. But the application was not to register Canadian Northern Ry. Co. v. Eggen, 40 Sup. these descriptive words 'merely,' alone and
Ct. Rep. 402. , .. apart from the marks shown in the drawing,
In the Eggen case the plaintiff, Eggen, a but in a described manner of association with other words, 'Round Oak,' which are not de
resident of North Dakota, recovered a judgscriptive of any quality of applicant's heating ment in the District Court for the District system, and as a definitely positioned part of of Minnesota on a cause of action for in
juries received by the plaintiff two years his rights when he is given free access to before while the plaintiff was in the em
| them for a length of time reasonably sufficient
to enable an ordinarily diligent man to inploy of the defendant Railway Company in
stitute proceedings for their protection." the City of Humboldt, Saskatchewan, Canada. This judgment was reversed by the Circuit
It is interesting to note that from a time Court of Appeals for the reason that by the
very early in our history, it has been custom. laws of Canada, this action should have been
ary to impose different requirements upon
non-residents than upon residents as a CORbrought in one year from the time the injury
dition of resorting to the local courts. This was sustained. The reason for the decision of the Court of Appeals was a statute of Min
is particularly true in the case of security nesota providing as follows:
for costs which is very generally required of
a non-resident, but not of resident citizens, "When a cause of action has arisen outside
So also in cases of attachment where a nonof this state, and, by the laws of the place where it arose, an action thereon is there
resident's property may be attached for reabarred by lapse of time, no such action shall
sons which would not justify an attachment be maintained in this state unless the plain of the goods of a resident. Of such requiretiff be a citizen of the state who has owned ments it has been said by the Supreme Court the cause of action ever since it accrued."
that "it has never been supposed that regu. The general rule in this class of cases is | lations of that character materially interfered that the law of the forum will govern as to with the enjoyment by citizens of each state the time in which an action can be brought of the privileges and immunities secured by unless the limitation is imposed specially in the Constitution to citizens of the several the law creating the right of action. In states." Blake v. McClung, 172 U. S. 239, 256, other words, as to the general statute of lim- | 19 Sup. Ct. 165. 172. itations the lex fori rather than the ler delicti controls, since in such a case it is a question referable to the remedy rather than to the substantive right created by the foreign law. WHAT IS A WHICHWAV _A DIS. In Minnesota, the limitation on actions of this character is six years. The decision of
CUSSION OF ENGLISH DECIthe Court of Appeals, therefore, would be cor SIONS. rect if the statute quoted above, applying a different rule to non-residents, infringes, as
In a case lately before the Divisional the Court of Appeals declares it does, the plaintiff's constitutional right to the “privileges
Court (Mr. Justice Darling) the authoriand immunities” enjoyed by citizens of Minne. ties cited disclosed an interesting series of sota.
attempts by our judges to frame a suffiThe Supreme Court, however, takes a dif
ciently wide definition of the term "highferent view of the question and holds that
way.” Such a task might be deemed comArticle 4, Section 2, of the Constitution is not violated by the statute relied upon by
paratively simple, but our readers will form the defendant railroad company. The Court their own conclusions after a perusal of in its opinion makes a very important declara what is underwritten, as to the success or tion as to the power of a state to discriminate
otherwise of the attempted definitions. against non-residents in respect to the right
Lord Hale in Austin's (Katherine) Case? of access to the courts of the state. The
said: "If a way lead to a market or were Court said:
a way for all travelers and did communi"This constitutional requirement is satisfied if the non-resident is given access to the | cate with a great road, etc., it is a highcourts of the state upon terms which in them
way.” In 1 Hawkins C. P.,' it is defined as selves are reasonable and adequate for the enforcing of any rights he may have, even
a way "which is common to all the king's though they may not be technically and pre people whether it lead to a market town cisely the same in extent as those accorded to resident citizens. The power is in the
or only from town to town." Lord Colecourts, ultimately in this court, to determine ridge in 1876: “The common definition the adequacy and reasonableness of such
of a highway that is given in all the textterms. A man cannot be said to be denied, in a constitutional or in any rational sense,
(1) 1672, 1 Vent. 189. the privilege of resorting to courts to enforcel (2) C. 76, Section 1.