Digital Commons Network^™

Contracts-Agreements For Leasing Departments In Retail Stores

Michigan Law Review

An important merchandising device, largely developed within the last fifteen years, is the "leasing" of certain departments by proprietors of retail stores to outsiders who agree to operate them as integral units of the owner's business. It has been estimated that more than sixty per cent of department stores and more than forty-eight per cent of specialty stores had leased departments in 1930, with the average number of such departments per store in each class at 4.6 and 2.5 respectively.

Corporations - Statutes Declaring Watered Stock Void - Effect Upon The Stockholder's Liability To Creditors

Michigan Law Review

Prior to the present era of "blue sky" laws providing for the careful scrutiny by the state of the issuance of stock, the evil of watered stock was sought to be curbed by constitutional and statutory provisions of a prohibitory and often penal nature. These statutes and constitutional provisions very generally take one of two forms.

The Colorado and the Arizona provisions are typical. In practical effect the two types of provisions are indistinguishable. The phrase "bona fide subscribers" in the Arizona form is construed to mean one who actually turns something of value over to the corporation in lieu …

Eminent Domain - Slum Clearance And Low-Cost Housing Program As Public Use

Michigan Law Review

A New York statute set up a public corporation with power to investigate and study housing conditions in the city, and to plan and carry out projects for the clearance of slums and the providing of housing accommodations for persons of low income. The corporation sought to condemn certain property owned by the defendant, who resisted the proceeding on the ground that the taking was not for a public use and therefore violative of the Fourteenth Amendment and a similar provision in the state constitution. Held, that the taking was for a public benefit and that therefore the constitutional …

Interstate Commerce - Jurisdiction Of Interstate Commerce Commission - "Tacking" Of Intrastate Hauls

Michigan Law Review

The coal company shipped coal from its mines in Pennsylvania by means of its own private railway, river barges, and tugs to a point in Ohio where the coal was unloaded, washed, freed from impurities, and sorted into appropriate sizes. Thereafter it was delivered by the company to a common carrier in Ohio for transportation to points within the state to .fill orders often not received until after the coal left the mines. Held, the haul by the common carrier in Ohio is not subject to the jurisdiction of the Interstate Commerce Commission and is intrastate commerce which may …

Municipal Corporations - Liability To Riparian Owners For Pollution Of Stream

Michigan Law Review

A stream into which the plaintiff in error dumped its sewage flowed through the lands of defendant in error. Odors from the stream, deposits of foreign substances on the banks, and the pollution of the waters about the farm of the defendant in error constituted a nuisance. Held, the city is liable to one suffering from the nuisance, irrespective of whether it is exercising a governmental function in the installation of the sewer system. Oklahoma City v. Tyetenicz, 175 Okla. 228, 52 P. (2d) 849 (1935).

Quasi-Contracts -- Profits As Measure Of Recovery For Appropriation Of Business Idea

Michigan Law Review

Plaintiff advertising firm submitted advertising plans at the invitation of defendant brewing company, in the hope of getting a contract to handle its advertising. Defendant awarded the contract to another, but appropriated and used extensively a slogan, "The Beer of the Century," from the material submitted by plaintiff, who sued to recover the value thereof. Held, that plaintiff was entitled to recover, on an implied contract to pay for the services, the value to defendant of the fruits of the services. How. J. Ryan & Associates, Inc. v. Century Brewing Assn., 185 Wash. 600, 55 P. (2d) 1053 …

Taxation - Exemption Of Federal Instrumentality From State Gasoline Tax

Michigan Law Review

An Alabama statute provided that "Every distributor, refiner, retail dealer or storer of gasoline . . . shall pay an excise tax . . . upon the selling, distributing, storing or withdrawing from storage in this State for any use, gasoline . . . ." The plaintiff, a private corporation, sold gasoline to the United States for use in performing governmental functions without reporting it for taxation. When the state demanded payment, the plaintiff brought this suit to restrain collection. Held (Justices Cardozo and Brandeis dissenting), the operation of the statute violates the constitutional principle safeguarding the federal government against …

Criminal Law And Procedure - Habitual Criminal Act - Prior Convictions - Pleading And Trial

Michigan Law Review

The petitioner was charged with grand larceny and was convicted by a jury. The court thereafter made a finding that the petitioner had previously been convicted of two other felonies, and that he had served a term in the Kansas penitentiary for one felony and a term in the Missouri penitentiary for the other. On that finding and the verdict of the jury, the court sentenced the petitioner to life imprisonment under a Kansas statute which prescribed increased penalties for habitual offenders. Held, that the prior convictions need not be charged in the information and that the petitioner was …

Public Utilities - Judicial Review Of The Rate Base

Michigan Law Review

The Secretary of Agriculture made an order fixing the rates chargeable by the appellant, the rate base being determined by the cost of reproduction new less depreciation. The district court held that, since by congressional act the findings of fact of the Secretary were made conclusive, the court could not make an independent determination of the value but was bound to take the Secretary's valuation if there was substantial evidence to support it. However, the court then went on to review the evidence before the Secretary and concluded that the appellant had failed to show that the valuation was "clearly …

Book Notes, Michigan Law Review

Michigan Law Review

This department undertakes to list and, when possible, describe briefly current books on law and matters closely related thereto.

Wills - Class Gift To Persons Named

Michigan Law Review

By the terms of his father's will, the plaintiff was made beneficiary of a trust fund which the testator directed "shall be and is in full of all claim . . . which he is to have out of my estate." Specific bequests were given to two of the testator's sons. The residue was devised and bequeathed "in equal parts to my following named children" (the seven brothers and sisters of the plaintiff being named as legatees). One son who was named both as a specific and residuary legatee predeceased the testator. The plaintiff contended that the bequest to that …

Constitutional Law-Police Power -Validity Of Compulsory Unemployment Insurance Act

Michigan Law Review

Complainants asked for a declaratory judgment that the New York Unemployment Insurance Act is unconstitutional. They contended that the law, providing for the payment of limited unemployment benefits out of a fund raised by a uniform payroll tax imposed on all employers, takes property without due process of law. Held, that the law is valid, violating neither the state nor the Federal Constitution. W. H. H. Chamberlain, Inc. v. Andrews, 271 N. Y. 1, 2 N. E. (2d) 22 (1936).

Uniform Corporation Laws Through Interstate Compacts And Federal Legislation, Robert S. Stevens

Michigan Law Review

It is the purpose of the present article to suggest that another means of accomplishing the end exists in the possibility of an interstate compact for uniform corporate legislation, coupled with supplementary federal legislation appropriate to make the interstate compact effective.

Constitutional Law - Bituminous Coal Conservation Act Of 1935 - Congressional Power Under The Commerce Clause To Regulate Labor Conditions In Local Industry And Fix The Price Of Sales In Interstate Commerce

Michigan Law Review

By its sweeping decision invalidating the Bituminous Coal Conservation Act of 1935, the Supreme Court precluded any future use of the commerce clause by Congress as a basis for federal regulation of labor conditions in local industry, whether on the theory that production is interstate commerce or that labor conditions directly affect interstate commerce.

Reorganization Without Consent Of Creditors - Section 77b (B) (5)

Michigan Law Review

On May 15, 1936, the Circuit Court of Appeals for the Seventh Circuit denied a petition for leave to appeal from an order confirming a plan of reorganization under Section 77B of the Bankruptcy Act in the case of In re Garfield Arms Hotel Building Corporation. The property of the debtor, consisting of a furnished hotel building, was encumbered by a first mortgage bond issue of $254,500 with interest at six and one-half per cent in default since October 16, 1929. There was a second mortgage of $50,000 and accrued interest as well as approximately $22,000 in judgments against …

Taxation-Federal Estate Tax-Inclusion Of Proceeds Of Insurance Policies In The Gross Estate

Michigan Law Review

It was only natural that the framers of our revenue acts, always on the lookout for new sources of revenue, should have turned their attention to the proceeds of insurance policies when they were dealing with the subject of death duties. It was natural for two reasons: first, the purchase of an insurance policy is nearly always prompted by some vague contemplation of death, and the receipt of the proceeds from a policy is intimately connected with death, in view of the fact that death normally is the event that brings about the maturity of the policy; and second, if …

Constitutional Law - Franchise Tax - Burden Upon Interstate And Foreign Commerce - Due Process - Equal Protection Of The Laws

Michigan Law Review

The state of California adopted a franchise tax which was based upon the corporations' net income apportioned according to "that portion which is derived from business done within the State." When this was construed to include not merely the income from intrastate business alone, but rather the income from both this and from all interstate and foreign business attributable to California, its enforcement was resisted upon the grounds that (1) so construed it was repugnant to the commerce clause upon the theory that it burdened interstate and foreign commerce, (2) it violated the due process clause upon the theory that …

Constitutional Law-Religion In The Public School

Michigan Law Review

Plaintiff sued as a taxpayer to enjoin defendant from permitting the use of school buildings by organizations of pupils based on religious affiliations and from directing the reading of excerpts from the Bible in the public schools. Plaintiff contended that in so far as the Greater New York Charter impliedly authorized the use of the Bible for such purposes, it was unconstitutional. Held, the action of the school board was proper, and injunction denied. Lewis v. Board of Education of City of New York, (N. Y. Sup. Ct. 1935) 285 N. Y. S. 164.

Constitutional Law-Trade Regulation-Fair Trade Act

Michigan Law Review

Plaintiff, owner of the exclusive right to sell certain popular trade-marked cosmetics in California, entered into a large number of contracts with wholesalers and retailers of that state, fixing the price at which those branded articles were to resell. Thereafter, pursuant to the provisions of the state Fair Trade Act, he brought suit to enjoin defendant, a retail druggist who had refused to make any such agreements and who, from sources unknown, had acquired such trade-marked articles, from reselling at less than the price stipulated in the contracts with others. A demurrer to the complaint was sustained, but on appeal …

Constitutional Law-Validity Of State Statute Forbidding Sale Of Prison-Made Goods Manufactured In Other States-Validity Of Federal Statute Permitting State Control Of Goods In Interstate Commerce

Michigan Law Review

Defendant was prosecuted in an Ohio court for selling in original packages goods shipped to him from an Alabama prison in which they were manufactured. The prosecution was under an Ohio statute prohibiting sale on the open market of goods, wares, or merchandise manufactured or mined wholly or in part in any other state by convicts or prisoners except those on parole or probation. Other Ohio statutes impose a like prohibition on the sale of convict-made goods manufactured in Ohio. The federal Hawes-Cooper Act provides that all goods, wares, and merchandise manufactured, produced, or mined wholly or in part by …

Taxation - State Income Tax On Interstate Railway - Constitutionality

Michigan Law Review

The plaintiff railway, doing local and interstate business, brought suit to recover payment made under a state net income tax measured by the difference between gross operating revenues for the whole business proportioned by the ratio of track mileage within and outside the state and operating expenses similarly proportioned. Held, such a formula for taxing the local income of a concern doing both intrastate and interstate business was not on its face invalid and the mere showing that the plaintiff's local costs were higher than the system average without also showing that intrastate revenues were not correspondingly greater did …

Taxation - State Occupation Tax On Intrastate Business Of Corporations Doing Both Intrastate And Interstate Business - Burden On Interstate Commerce

Michigan Law Review

The state of Washington imposed an occupation tax on practically all businesses within the state based on gross income from intrastate business. The Pacific Telephone and Telegraph Company sought to enjoin, and the state sued the Great Northern and the Northern Pacific Railway Companies for, the collection of this tax. Both the telephone company and the railways relied on the alleged rule of law that an occupation tax laid upon the local business of a foreign corporation engaged in both intrastate and interstate business is necessarily void unless the corporation is free in law and in fact to withdraw from …

Wills - Election To Take A Bequest Or Devise

Michigan Law Review

The testator made a bequest of $2,000 to the First Lutheran Church. This bequest was to be paid by the testator's sons, who were made residuary legatees on condition that they pay the $2,000. The sons asserted a constitutional provision that no man shall be compelled to erect, support or maintain any religious order against his consent as a defense to any payment required of them. Held, the bequest was valid on the theory that there was no compulsion to pay as the sons could elect not to take under the will. However, if the sons did take, they …

Book Notes, Michigan Law Review

Michigan Law Review

This department undertakes to list and, when possible, describe briefly current books on law and matters closely related thereto.

Front Matter, Michigan Law Review

Michigan Law Review

Front Matter for Volume 34, Issue 8 of Michigan Law Review

Corporations-Liability Of Promoters For Secret Profit

Michigan Law Review

In view of the peculiar position of control which a promoter occupies in relation to the proposed corporation, with resultant opportunities for making unconscionable profits, courts have uniformly regarded him as standing in a fiduciary relationship toward the corporation. Accordingly, when a promoter seeks to make a profit from a transfer of property to the corporation, he must obtain the consent of the latter under penalty of having to disgorge such profit at a later time at the suit of the corporation itself or persons acting in the latter's behalf. Such liability is to be distinguished from the liability of …

Bankruptcy - Recovery Of Preferences - Requirement That Defendant Be Paid A Greater Percentage Of His Claim Than Other Creditors

Michigan Law Review

In a suit by the trustee in bankruptcy to recover as preferences part payments to defendant within four months of bankruptcy, the trial court refused to rule that the trustee had the burden of proving that each payment had the effect of giving to the defendant a greater percentage of his claim than other creditors would have received if the estate had been liquidated at that time. Held, the court's refusal was proper. Palmer Clay Products Co. v. Brown, 297 U.S. 227, 56 S. Ct. 450 (1936).

Constitutional Law-Due Process--Nonresident Motorist Statute

Michigan Law Review

Petition for writ of prohibition on the ground that the notice provided by the Arkansas nonresident motorist statute did not meet the requirements of the due process clause of the Fourteenth Amendment. The statute required that service of process be had on the secretary of state and that the plaintiff send notice of such service to the nonresident defendant at his last known address by registered letter, and required that the defendant's return receipt or the affidavit of the plaintiff of compliance with the statute be filed in the office of the clerk of court. Held, the statute is …

State "Blue-Sky" Laws And The Federal Securities Acts, Russell A. Smith

Michigan Law Review

With the current revival of business has come increased activity in the securities markets. Corporations are taking advantage of low money rates to refund outstanding issues and, to some extent, to obtain new money for corporate purposes. If the upturn in business proves to be substantial, rather than merely a temporary, government-induced short-time swing, the issuance of securities for the purpose of financing capital improvements will doubtless accelerate. Questions arising under the various laws, federal and state, for the regulation of the sale of securities will become increasingly important. Persons interested in the issuance and disposal of securities desire, of …

Constitutional Law - Interstate Commerce - State Occupation Tax On Operation Of Radio Broadcasting Station

Michigan Law Review

A domestic corporation, owning and operating two radio stations, both broadcasting well beyond the state's borders, sought to enjoin the enforcement of an annual occupation tax equal to one per cent of gross income from business within the state. It was admitted that while a state might impose a property tax on a business engaged only in interstate commerce or a tax solely to support regulation in the exercise of the state's police power, an unapportioned gross income tax on a business engaged in intrastate and interstate commerce would be an unconstitutional burden on interstate commerce, although a net income …