Digital Commons Network^™

Non-Trade And Non-Business Expense Deductions: Section 23(A)(2) Of The Internal Revenue Code, R. W. Nahstoll

Michigan Law Review

Among the innovations introduced into the Internal Revenue Code by the Revenue Act of 1942 was the provision allowing deduction from gross income, in the computation of net income, of nontrade and non-business expenses. Every revenue act including the Act of 1894, has provided in one form or another for the deduction of trade and business expenses.

Recent Developments In Restitution: Rescission And Reformation For Mistake, Including Misrepresentation, Edward S. Thurston

Michigan Law Review

In accordance with underlying equitable principles, restitution is granted where a mistake has been made by one or both parties to a transaction or series of transactions because of which one of them has obtained an advantage which it would be unjust for him to retain.

There are two forms of relief, one based upon rescission, the other upon reformation. The first seeks the undoing of a transaction and the replacing of the parties into the positions, as nearly as may be, originally occupied. On the other hand, reformation seeks the performance of an agreement as the parties to it …

Federal Courts--Third-Party "Practice--Some Jurisdictional Problems Arising Under The Amended Federal Rules Of Civil Procedure, Effective March 19, 1948, Chester Lloyd Jones S.Ed.

Michigan Law Review

Third-party practice as originally adopted by the Federal Rules of Civil Procedure was one of the bolder steps in the direction of integrated and complete litigation of all phases of a transaction. One of the principal problems that was forseen by the commentators and that has in fact developed in the cases is the jurisdictional limitation of the federal courts where no federal question is involved, and jurisdiction depends on diversity of citizenship or alienage. Rule 82 is explicit in stating that the Rules should be interpreted so as not to extend or limit the jurisdiction of the district courts. …

Corporations-Redeemable Stock-Fiduciary Duty Of Directors, Leroy H. Redfern S.Ed.

Michigan Law Review

A federal district court judge introduced an opinion on the fiduciary obligation of corporate directors by stating that "the doctrine of the fiduciary relation is one of the most confused and entangled subjects in corporation law." In Zahn v. Transamerica Corporation the fiduciary duties of corporate directors were discussed extensively by the Third Circuit Court of Appeals. The court not only failed to terminate the confusion and clear the entanglement but may well have added to it by using the fiduciary concept in a new field.

Taxation-Debt Reduction, John M. Veale S.Ed.

Michigan Law Review

Inherent in an economy financed by a large volume of credit, extending over varying intervals of time, is the problem of debt reduction and revalorization. The ramifications of this problem in the income tax field have long intrigued legal scholars and confounded the courts. A recent case illustrates anew the danger, to client and counsel, lurking in the assumption that the tax significances of debt reduction have finally been reduced to mathematical certainty. The taxpayer borrowed $90,000 from a bank in 1925, using the funds to pay off encumbrances upon, and make improvements on, a piece of property. As a …

Descent And Distribution-Uniform Simultaneous Death Act--Applicability Of Lapse Statute, Edward S. Tripp S.Ed.

Michigan Law Review

H and W were found dead or near death. The will of each left all property to the other. Nephews and nieces survived W while no relatives survived H. W's relatives claimed both estates against a claim of escheat. The lower court found that H survived W and that W's kin were entitled to take under the Maryland lapse statute. On appeal, held, affirmed. Regardless of which party survived, application of the Uniform Simultaneous Death Act and the lapse statute entitled W's relatives to take against the claim of escheat. Mayor and City Council of …

Eshheat-Bona Vacantia-Right Of State To Claim Unclaimed Royalty Payments Of A Corporation, N. S. Peterman

Michigan Law Review

The State of Arkansas brought suit against defendant to recover "various moneys, rents, royalties, credits, and other personal property, which had been unclaimed, forgotten, abandoned, or otherwise lost by-various persons," and which were allegedly in the possession of defendant. The state, not knowing who the previous owners were, submitted interrogatories to defendant which were designed to discover exactly what was in defendant's possession, and who had been the last known owners thereof. The state based its claim on the statutes and on the common law doctrine of bona vacantia. Defendant's demurrer was sustained. On appeal, held, affirmed. The state …

Bankruptcy-Set-Off-Bank Deposits, A. E. Anderson S.Ed.

Michigan Law Review

Endorsers of a corporation's notes caused the corporation to make deposits in the payee bank in the regular course of business, knowing the corporation to be insolvent, and the bank took over the deposits within four months of adjudication in bankruptcy. It was contended that under the amended definition of "transfer" as set out in section 1 (30) of the Bankruptcy Act of 1938, this transaction resulted in a voidable preference to the endorsers under section 60. The trial court rejected this contention. On appeal, held, affirmed. Although the 1938 amendment gave a broader significance to the term "transfer" …

Insurance-Gift-Right Of Named Beneficiary Of Life Policy To Proceeds As Against A Donee By Delivery, Bruce L. Moore S.Ed.

Michigan Law Review

Insured, in accordance with the terms of a life insurance policy, named the woman with whom he was then living as beneficiary. Subsequently, he returned to his wife and handed the policy to her with appropriate words indicating an intention to make a present and absolute delivery of it to her as a gift. No notice of a change of beneficiary was given to the insurance company. The policy reserved the right to insured to change the beneficiary by filing a written request with the company, such change to take effect only when indorsed on the policy by the company. …

Constitutional Law--Due Process-Federal Restrictions On The Use Of Confessions In State Criminal Proceedings, F. L. Adamson

Michigan Law Review

Undisputed evidence established that petitioner, a negro boy of fifteen, was arrested at about midnight, October 19, 1945 and taken to police headquarters. He was questioned by the police with no friend or counsel present. He was not informed of his right to counsel or of his right to refuse to answer. At about five in the morning, October 20, he confessed. He was then informed of his rights and his statement taken and transcribed. He was photographed by a newspaper photographer, and then placed in jail. On October 23 he was, for the first time, taken before a magistrate …

Corporations - Proxy Statement - Necessity For Disclosure Of Alternative Plans And Of Motive In Solicitation, J. R. Mackenzie

Michigan Law Review

The management of a corporation solicited proxies to support a proposed recapitalization plan, submitting data from which the inference could be drawn that the plan was designed to perpetuate the management. A stockholder sued to enjoin the holding of a special meeting and the use of the proxies obtained, on the grounds that failure to present possible alternatives to the proposed plan and failure to state that its purpose was to perpetuate the management were violations of Rule X-14A-5 of the Securities and Exchange Commission. Held, injunction denied. Doyle v. Milton, (D.C. N.Y. 1947) 73 F. Supp. 281.

Equity-Laches And Estoppel As Barring Equitable Relief In Protection Of An Easement, Chester Lloyd Jones S.Ed.

Michigan Law Review

Grantors had conveyed to plaintiff a certain lot in a subdivision with a provision "leaving a street sixty feet wide between Block Five . . . and the . . . tract herein conveyed." A plat of the addition, showing the street, had also been filed. Subsequently, the grantors conveyed to the defendant the land theretofore comprising the street. Construction on that land was begun and seventy-two days later when the building was 40 per cent completed and represented an expenditure of $2,000, plaintiff filed a suit to restrain interference with his easement, serving notice thereof on the defendant the …

Executors And Administrators-Powers Of Executor Prior To The Grant Of Letters Testamentary, R. V. Wellman

Michigan Law Review

Testator's will was probated solely for the purpose of passing title to the real estate involved. There was no request for letters testamentary by those named executors in the will, it being alleged that there was no personal estate necessitating administration. Six days prior to the expiration of the statutory period for commencing such an action, plaintiffs, creditors, started a suit against the persons named as executors for the purpose of extending the lien of their debt against the land in the estate. The defendants appeared specially to question the propriety of the action against them. On appeal from the …

Labor Law-Applicability Of The Lea Act To Activities Of The American Federation Of Musicians, W. J. Schrenk, Jr.

Michigan Law Review

Defendant, acting as president of a local union of the American Federation of Musicians, requested a new contract with a broadcasting station licensed by the Federal Communications Commission, including a provision that the licensee hire three extra musicians, raising to six the total number of musicians employed. When negotiations regarding this provision failed, defendant withdrew from the licensee's services the three musicians (members of the A.F. of M.) already employed by it. An action was, then brought to prosecute defendant under the amendment to the Federal Communications Act, popularly known as the Lea Act, which prohibits the use of threats …

Future Interests-Deeds-Construction Of Language To Create A Trust And A Condition Subsequent, Ira M. Price, Ii S.Ed.

Michigan Law Review

A deed conveyed land to a named schoolmaster of Bristol and his successors forever "for their support for instruction of the children of the town, . . . Provided always . . . that if the said town shall neglect to place a good and sufficient Grammar schoolmaster in the said town at the death or removal of any schoolmaster . . .for the space of twelve months after the said death or removal, that the land shall" revert to me . . . and my heirs as fully and as effectively as if this deed had not been made …

Process-Applicability Of Nonresident Motorist Statutes To Accidents On Private Property, Chester Lloyd Jones S.Ed.

Michigan Law Review

Defendant, a nonresident combine operator, in the course of performance of a contract to harvest plaintiff's wheat crop, drove his vehicle into the plaintiff's wheat field thereby causing a fire which destroyed part of the crop. Plaintiff began an action against defendant by service in accordance with a nonresident motorist statute. The applicable statute read in part:" . . . the acceptance by a nonresident . . . of the rights and privileges . . . to operate motor vehicles on the public highways of the state . . . shall be deemed equivalent to an appointment . . . …

Judges-De Facto Judges, J. R. Swenson S.Ed.

Michigan Law Review

In 1947, the Arkansas legislature created an additional division in the First Chancery Circuit and provided that the office be filled until the next general election by Ruth F. Hale, the then Master of Chancery in that circuit. In Arkansas, divorce is an equitable proceeding, and from the date of her appointment, Chancellor Hale had granted an estimated 1,750 divorces. Defendant appealed a divorce decree granted by Chancellor Hale alleging it to be void. Held, decree vacated. Three judges dissented. Howell v. Howell, (Ark. 1948) 208 S.W. (2d) 22.

Taxation - Federal Income Tax - Choice Of Remedies-Tax Court Or District Court, Samuel N. Greenspoon S.Ed.

Michigan Law Review

Plaintiff, in 1935, purported to set up a trust of $300,000 for the benefit of her infant daughter; and thereafter in 1936 paid the gift tax thereon. She then borrowed from the trustee; (herself and husband) $298,000 of the trust corpus. In 1938 she paid $35,760 interest to the trustees and attempted to deduct it as an expense. This deduction was disallowed and the plaintiff then filed in the Tax Court a petition for redetermination on the ground that the gift tax of 1936 had been erroneously paid and should now be allowed as a credit against the assessed deficiency …

Taxation-Federal Income Tax-Claim For Refund-Statute Of Limitations, Samuel N. Greenspoon S.Ed.

Michigan Law Review

The commissioner determined that a deficiency existed in the taxpayer's income tax for 1938. This deficiency assessment was paid in 1941. More than three years later the taxpayer filed a claim for refund which was rejected by the commissioner on the ground that it was barred by the two year limitation period of section 322 (b) (1) of the Internal Revenue Code. The taxpayer then brought suit in the district court contending that the four year limitation period of section 3313 of the code was applicable. The district court sustained the taxpayer, and the judgment was affirmed by the circuit …

Process-Obtaining Personal Jurisdiction Over Foreign Corporation By Service Of Process On Local Sales Agent, F. William Hutchinson S.Ed.

Michigan Law Review

Defendant, a Texas manufacturing corporation, employed a corporate agent to solicit orders in New York. The agent maintained a showroom, used defendant's name on its office door and stationery, and paid all the expenses of the New York business out of sales commissions. All orders were subject, to acceptance by the defendant and were filled from Texas. In an action for trade-mark infringement brought in the New York state court and removed to the federal district court, service of summons and complaint was made upon the manager of the New York agency. The district court quashed the service and dismissed …

Recent Books, Michigan Law Review

Michigan Law Review

This department undertakes to note or review briefly current books on law and matters closely related thereto.

Notes, Michigan Law Review

Michigan Law Review

The information given in the notes is derived from inspection of the books, publisher's literature, and the ordinary library sources.

Wills-Dependent Relative Revocation When Revocatory Codicil Contains Ineffective Substituted Bequest, F. William Hutchinson S.Ed.

Michigan Law Review

Testator's will, executed in 1926, provided a trust fund for his adopted daughter, then a minor, and named his wife as residuary legatee. By the terms of the will the daughter was to receive the trust income after she became twenty-one and the principal when she reached the age of thirty-five. In 1942, when the daughter was thirty-one, married, and the mother of two children, the testator added a codicil which included the following provision: "I hereby revoke the Trust Fund in favor of my Daughter Mildred, and substitute a lump sum of ___ dollars in cash." The testator died …

Monthly Periodical Index, Michigan Law Review

Michigan Law Review

This departments lists the articles and comments which appear in twenty-four leading law reviews. The index embraces material published since the last issue of this REVIEW.

Recent Books, Michigan Law Review

Michigan Law Review

This department undertakes to note or review briefly current books on law and matters closely related thereto.

Front Matter, Michigan Law Review

Michigan Law Review

Front Matter for Volume 46, Issue 7 of Michigan Law Review

The Bill Of Rights, The Fourteenth Amendment And The Supreme Court, John Raeburn Green

Michigan Law Review

The first enforcement of any of the First Amendment freedoms against the states, through the Fourteenth Amendment, was in 1927. In the twenty years since, these freedoms have, one by one, been brought within the protection of the due process clause of the Fourteenth Amendment, as integral parts of the "liberty" which is safeguarded against state denial-the process having been completed in 1947 by the dictum that the prohibition of the establishment of religion ran against the states. The chronology of the struggle to enforce the Bill of Rights against the states, as well as other circumstances, suggests that the …

Some Problems In Special Assessment District Obligations, Irvin Long

Michigan Law Review

The question of the jurisdiction of a board or officer authorized to construct a local improvement and levy special assessments therefor has always been troublesome, and is particularly so when bonds or other obligations are issued in anticipation of the collection of such assessments. A vast amount of litigation has occurred in Michigan in recent years over drain district assessments, and bonds which such districts have issued. While this is of primary interest to Michigan lawyers and investors in public securities, many of the questions involved seem to be of such a general nature, so far as special assessment procedure …

Bankruptcy-Contempt--Presumptions-Finality Of Turnover Orders In Contempt Actions And The Presumption Of Continued Possession, T. L. Tolan, Jr. S.Ed.

Michigan Law Review

Problems of jurisprudence and bankruptcy are raised by Maggio v. Zeitz, a recent decision of the United States Supreme Court. The facts were these: In April, I942, the Luma Camera Service was adjudged a bankrupt. Defendant was its principal officer. The bankrupt's books showed a large and unusual merchandise shortage for November and December, 1941. Despite defendant's denial, the referee and district judge were satisfied that defendant had extracted the property from the estate before bankruptcy. But there was no evidence that defendant retained the goods or their proceeds. Relying on a presumption of continued possession, the referee ordered …

Constitutional Law--The President's Loyalty Order--Standards, Procedure And Constitutional Aspects, William J. Schrenk, Jr.

Michigan Law Review

In the most recent of the efforts of the last several years to protect the ranks of officers and employees of the federal government from infiltration by foreign agents and persons whose interests are inimical to those of the United States, President Truman, on March 21, 1947, issued his "Loyalty Order." The first item in the pattern of statutes, orders, and regulations which supplies the background for the controversial Order No. 9835 was the Hatch Act of 1939, by which Congress prohibited federal employees from membership in organizations advocating the overthrow of the constitutional form of government. One year later, …