Digital Commons Network^™

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 …

Municipal Corporations - Effect Upon Collection Of Tort Judgments Of Constitutional And Statutory Limitations On Indebtedness And Taxing Powers, Michigan Law Review

Michigan Law Review

In an effort to protect the taxpayer from the extravagance of municipal officials, two types of restrictions, in the main, have been imposed: those limiting the power to contract debts, and those restricting the power to levy taxes. Frequently in an effort to recover and collect a judgment against the city, one or the other of these restrictions is met. Courts seem to hold unanimously that debt limitations apply to the city's obligations in contract and not in tort, but they are divided as to the effect of tax limitations upon collection of a tort judgment. As an example of …

Conflict Of Laws -Enforceability Of Tax Judgment In Courts Of A Sister State - Full Faith And Credit

Michigan Law Review

A court of competent jurisdiction in Wisconsin gave the plaintiff a judgment against the defendants an Illinois corporation, for truces levied by Wisconsin upon income earned in that state. A federal district court in Illinois, relying on a theory that one state should not undertake to enforce the revenue laws of a sister state, dismissed an action on the judgment instituted by the plaintiff. The plaintiff appealed. Held, principles of comity and the "full faith and credit" clause of the Federal Constitution require that the action be entertained. Milwaukee County v. M. E. White Co., 296 U.S. 268, …

Constitutional Law - Due Process - Bank Receiving Deposits During Insolvency

Michigan Law Review

An Ohio statute provided that an officer of a bank who received a deposit therein "when he has knowledge that it is insolvent" shall be subject to criminal liability. The defendant, a director of a state bank, was indicted under the statute for receiving deposits therein knowing the bank to be insolvent. The court of appeals reversed a decision of the common pleas court dismissing the defendant. On appeal the defendant contended that the statute violated the due process clause of the Fourteenth Amendment of the Federal Constitution in that the use of the word "insolvent," without providing a definition …

Constitutional Law - Impairment Of Obligation Of Contracts Change In Statutory Regulations For Withdrawal And Payment Of Building And Loan Association Members

Michigan Law Review

Plaintiff became a member stockholder of the defendant building and loan association under a general Louisiana statute authorizing such corporations. This law provided for withdrawal of members, setting up a fund for payment to be made in order of notice of intent to withdraw. Plaintiff placed his name on the list, but before payment the statute in question was enacted and payment was refused. This statute abolished the liquidation fund and changed the order of withdrawal to a payment of 25 per cent of the claim at the head of the list, the claimant's name to be then placed at …

Contracts - Indefiniteness - Effect Of Buyer's Right To Require Alternative Performance

Michigan Law Review

A buyer, who had agreed to take a certain number of gallons of oil within a viscosity range comprising seven weights, each weight being listed at a different price, repudiated his contract without having specified any of the seven types. In a suit by the seller to recover for breach of contract, held, as the indefiniteness of the agreement precluded any damages save those based on speculative, average, or other arbitrary price, it was not enforcible and plaintiff could not recover for defendant's refusal to accept oil. Wilhelm Lubrication Co. v. Brattrud, (Minn. 1936) 268 N. W. 634.1

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 …

Criminal Law And Procedure - Fraudulent Deprivation Of Possessory Lien As Larceny

Michigan Law Review

Defendant engaged a furrier to repair her fur coat. After the repairs were completed, she obtained possession of the coat on the pretense of trying it on and refused to return it or to pay for the work done. She was charged with grand larceny, the theory of the prosecution being that she feloniously deprived the furrier of his property (his repairmen's lien). Held, conviction affirmed. The court seemed to say that the value of the coat rather than the amount of the lien determined the degree of the larceny. State v. Cohen, (Minn. 1935) 263 N. W. …

Criminal Law And Procedure - Non-Unanimous Verdicts - Constitutionality

Michigan Law Review

An amendment to section 11, article 1 of the constitution of the state of Oregon permitted the concurrence of ten of the twelve jurors to control in criminal trials except in cases of murder in the first degree. It was claimed that this amendment discriminated against persons charged with second degree murder and in favor of those on trial for first degree murder, since in the latter case the jury could recommend life imprisonment which was the punishment prescribed in the former. The court held that there was no violation of the Fourteenth Amendment of the Federal Constitution. State v. …

Insurance - Remainderman's Share In Proceeds Of Life Tenant's Policy

Michigan Law Review

Buildings insured by the life tenant for their full value were totally destroyed and the insurance money paid over to the life tenant. The remainderman brought suit under a statute requiring the giving of security for the protection of the remaindermen by those having limited interests in personal property. Held, the remainderman has no interest in the proceeds of the policy and cannot compel the life tenant to render security. In re Gorman's Estate, (Pa. 1936) 184 A. 86.

Constitutional Law - Race Segregation Ordinance - Effect Of Military Order Of Governor Issued For Same Purpose

Michigan Law Review

A "segregation ordinance" of Oklahoma City, prospective in nature, made it unlawful for any negro to occupy as a residence any house or building located in a block wherein a majority of the buildings used were occupied by white persons. The initial step in the segregation of races in the city occurred when the Governor issued a military order for the separation of the races, because it appeared that riot and bloodshed were imminent; such order to remain in effect until an ordinance was passed in lieu of the order. Held, the ordinance was an invalid exercise of the …

The Fiction Of Peaceful Picketing, Frank E. Cooper

Michigan Law Review

Efforts of labor organizations during the past decade to secure the enactment of legislation guaranteeing strikers the privilege of peaceably picketing their employers' places of business, appear to have gained for union members no more than a Pyrrhic victory. Although at least nineteen states now have statutes intended to prohibit judicial interference with peaceful picketing, a review of recent cases in this ever timely field indicates that in general such laws have been construed to limit the privileges of pickets to activities so pusillanimous as to be of little aid to the strikers and of little annoyance to employers. In …

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.

Attorneys - Disbarment - Statute Of Limitations

Michigan Law Review

An attorney guilty of professional misconduct interposed as a defense the statute of limitations, which required that no proceeding to disbar or suspend an attorney be instituted except within two years after the commission of the offense or within one year after the discovery thereof. The court held the statute unconstitutional as an attempted projection of legislative power into the judicial department; the effect of the statute being to dictate to the court what evidence it might consider. In re Tracy, (Minn. 1936) 266 N. W. 88.

Election Of Remedies - As Between Conversion And Replevin - Measure Of Recovery

Michigan Law Review

Through fraud, defendant received from plaintiff certain shares of stock together with other securities to secure a loan of $300,000 to the plaintiff. Defendant wrongfully hypothecated this stock. Plaintiff, after learning of the conversion, sued for the specific stock in replevin. During the course of the action he changed his demand to one in damages for conversion. The court held that plaintiff may not change the theory of his cause of action from replevin to conversion. Satterwhite v. Harriman Nat. Bank & Trust Co., (D. C. N. Y. 1935) 13 F. Supp. 493.

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 …

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 …

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 …

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.

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-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).

Taxation -Interstate Commerce- Levy On Use By Interstate Carrier Of Gasoline Bought Outside State

Michigan Law Review

A statute of New Mexico imposed "an excise tax of five cents (5c) per gallon upon the sale and use of all gasoline and motor fuel . . . " The effect of the statute was to compel the appellee corporation, a common carrier, to pay a tax upon the use of motor fuel purchased in and brought from another state and used only in such transportation. This suit was brought to enjoin enforcement of the foregoing statutory provision on the ground that it constituted a regulation of interstate commerce in contravention of the commerce clause of the Federal Constitution. …

Trusts - Commingling By Life Tenant Of Personalty Not An Act Which Necessarily Requires The Giving Of Security For Remainderman's Protection

Michigan Law Review

T, after certain other bequests, left the residue of his estate, consisting of personalty in the form of stocks, bonds, cash securities, out of which the debts of the estate were paid, to his wife for life, remainder to T's children. The wife commingled this fund with her personal funds, negligently, but not fraudulently. P, one of the remaindermen, brought a bill for accounting and appointment of a trustee, or at least for requiring security of the life tenant for P's protection. Held, mere negligent commingling by the life tenant does not alone constitute a …

Wills - Conveyance By Testator Of Land Devised As Implied Revocation

Michigan Law Review

Testator devised "all the property, real, personal or mixed of which I die seised" to defendant. Subsequently, he and his wife conveyed a portion of the land he then owned to the defendant. Defendant later reconveyed to the testator. Testator never republished his will, nor altered it in any way. Plaintiffs are his heirs at law and insist that as to these lands the will was revoked and the testator died intestate. Held, there was no revocation here. The land in question passed under the devise to the defendant as after-acquired property, the language of the general devise being …

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.

Practical Results Of Federal Equity Rule 75 (B) As To Restatement Of Testimony In Narrative Form, Marion L. Severn

Michigan Law Review

During the twenty-four years since the adoption of the narrative form for records on appeal in the federal courts under Equity Rule 75 (b), there have been some printed comments and criticisms of the rule as well as informal and unrecorded discussion by the bench and bar. The more recent comments on the working out of the rule vary little from the prophecies made soon after its adoption. There is not much of value that can be added to the theoretical discussions of the rule either by its proponents or its opponents. But there remain certain highly important practical questions: …

Trusts-Restated And Rewritten, Harry W. Vanneman

Michigan Law Review

Two books were published during the past year which are of the greatest importance to those of the legal profession who are interested in the law of trusts. Professor Bogert's seven volumes appeared first, followed shortly by The Restatement of the Law of Trusts by the American Law Institute, of which Professor Scott, of the Harvard Law School, was the reporter. Professor Bogert, of the University of Chicago Law School, was a member of the Institute's Committee on Trusts. Since 1927, therefore, when the Institute began work on the Restatement of Trusts, Professor Bogert apparently has been working …

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.

Corporations - Rights Of Creditors Of Insolvent Corporation - Greater Than Rights Of Corporation

Michigan Law Review

The dissenting and majority opinions of Justices Roberts and Cardozo in the recent case of McCandless v. Furlaud are illustrative of basically divergent conceptions of the status and function of the corporate receiver. In the following examination and evaluation of these conflicting positions, attention will be directed chiefly to those situations involving the problem of promoter's profits. The language and attitude of the courts, however, is typical of that adopted in all cases in which the questions considered arise and the conclusions suggested are of general application.