Commercial Law Commons^™

Book Reviews, Law Review Staff

Vanderbilt Law Review

Decision at Law

By David W. Peck.

New York: Dodd, Mead & Co.,1961. Pp. vii, 303.

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Corporation Lawyer: Saint or Sinner? By Beryl Harold Levy.

Philadelphia and New York: Chilton Co., 1961. Pp. x, 175.

reviewer: Elliott E. Cheatham

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Criminal Psychology Edited by Richard W. Nice. New York: Philosophical Library, Inc., 1962. Pp. 284.

reviewer: J. Paschall Davis

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Symposium on the Labor-Management Reporting and Disclosure Act of 1959 Edited by Ralph Slovenko. Baton Rouge: Claitor's Bookstore, 1961. Pp. xliv, 1237. $20.00.

reviewer: Robert N. Covington

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Handling Accident Cases, Vol. 3

By Albert Averbach.

Rochester: The Lawyers …

The Wage Earners' Plan: Its Purpose, Walter Chandler

Vanderbilt Law Review

Chapter XIII is the forerunner of the general revision of the National Bankruptcy Act in 1938. Introduced as a bill for the relief of harassed wage earners who desire to pay their debts if given sufficient opportunity, the bill attracted the attention of the Honorable Hatton W. Sumners, Chairman of the Committee on the Judiciary of the House of Representatives. In view of the cumulative need for a definitive study of the law of bankruptcy with the end view of enacting a complete revision of the Act of 1898, a special subcommittee on bankruptcy was created; this subcommittee, with the …

A Decade Of The Celler-Kefauver Anti-Merger Act, Charles J. Steele

Vanderbilt Law Review

Corporations intent upon expanding via the acquisition route have had three statutory hurdles placed in their way by the Congress of the United States. As hurdles, the first two, the Sherman Act of 1890 and the Clayton Act of 1914, were failures. A judiciary which refused to give effect either to the language or intent of the acts nullified completely their usefulness as anti-merger weapons.

The third hurdle, the Celler-Kefauver Amendment to the Clayton Act, was enacted in 1950. Relatively few judicial opinions have interpreted this act, "new section 7," as it is called. It is clear, however, that it …

Bills And Notes -- 1961 Tennessee Survey, John A. Spanogle Jr.

Vanderbilt Law Review

The Tennessee courts decided three cases involving commercial paper this year. The Tennessee Supreme Court decided one case which, unless it is clarified in the near future, may upset principles which were heretofore well-established. Of the two cases decided by the appellate courts, one adopted a rule well-known in other jurisdictions, and the other adopted a sound minority view on a question not settled by the Uniform Negotiable Instruments Law.

Federal Jurisdiction In Personam Of Corporations And Due Process, Thomas F. Green Jr.

Vanderbilt Law Review

A great deal has been written about the personal jurisdiction of state courts and particularly about the applicable due process requirements.' Much less has been contributed by commentators on the subject of due process requirements applying to in personam jurisdiction of a United States district court. Perhaps the reason is the difficulty of finding a rationale in the pertinent decisions. These fail to distinguish between the conditions necessary for valid service of federal court process as contrasted with those essential to the proper service of state process. They also fail to explain why the constitutional provision brings about the result …

State And Local Taxation -- 1960 Tennessee Survey, Paul J. Hartman

Vanderbilt Law Review

A congressional statute that became law on September 14, 1959,severely curtails the power of all state and local governments to impose net income taxes. This statute was the aftermath of the Northwestern-Stockham decision, and a series of cases soon to follow, by the United States Supreme Court, which held that neither the due process nor the commerce clause bars the way to a nondiscriminatory, properly apportioned state tax levied directly on net income derived exclusively from interstate commerce. These decisions by the Supreme Court caused such a furor in the business world that demands were soon made on Congress for …

Business Associations -- 1960 Tennessee Survey, Kenneth L. Roberts

Vanderbilt Law Review

Two opinions of the court of appeals during the survey period-one unpublished-discussed the fiduciary duties owing by officers and directors to their corporations. In Harriman Welding Supply Co. v. Lake City Lightweight Aggregate Corp.,' Presiding Judge McAmis of the eastern section found occasion to state the principles applicable when the fairness of contracts between two corporations having interlocking directorates is questioned.

Non-Tax Aspects Of Thin Incorporation, Thomas H. Rainey Jr.

Vanderbilt Law Review

The coveted privilege of conducting business in the corporate form is not an unconditional grant.' As consideration for granting the corporate privilege of doing business with limited liability, the law requires that the shareholders "put at the risk of the business some stake which shall appear reasonably adequate for its prospective needs." This "stake," characterized as equity capital, represents that portion of the shareholders' capital investment which is required by law as the basis of financial responsibility for the protection of corporate creditors. This special fund is substituted for the personal liability which the participants would otherwise have for the …

Tax And Other Legal Aspects Of The Corporate Practice Of Medicine, Jerry B. Martin

Vanderbilt Law Review

With the coming of regulations allowing doctors the tax advantages of corporate employees, the doctors will probably be more solidly behind the positions of the AMA in favor of the prohibition against the corporate practice of medicine. For example, at least one state group, the Tennessee State Medical Association, has recently adopted a resolution against practicing medicine in the corporate form, and there have been no recent reports of state associations taking the opposite position. The American Hospital Association which seems to lead the opposition to the corporate practice rule does not attack the rule as being intrinsically bad but …

State Taxation Of Corporate Income From A Multistate Business, Paul J. Hartman

Vanderbilt Law Review

So long as we have a federal system of government, a continuing problem, and certainly one of the most pressing, is that of an effective coordination of taxes. That problem has achieved paramount impor- tance in late years. Because of new and expanding conceptions as to what governments should do for people, our state governments are continually confronted with ever-increasing demands that they provide additional governmental functions and supply more governmental services. The resulting increase in governmental activities and extension of benefits mean urgent needs for additional revenue. As prices have spiraled under the increasing pressure of meeting our domestic …

Fifteen-Year Survey Of Corporate Developments, 1944-1959, Miguel A. De Capriles

Vanderbilt Law Review

The foregoing survey, it is believed, amply demonstrates the kaleidoscopic variety of the corporate developments of the past fifteen years, even though for obvious reasons much of the detail has had to be omitted. General conclusions are difficult to draw. It seems likely that the success of capitalist enterprise in this, period and the self-imposed improvement in standards of corporate. Fanchon & Marco, Inc. v. Paramount Pictures, 202 F.2d 731 (2d Cir. management have retarded the underlying trend toward expansion of the role of government in the regulation of economic affairs. There has been no occasion for new dramatic statutory …

Subchapter S And Its Effect On The Capitalization Of Corporations, Mortimer M. Caplin

Vanderbilt Law Review

Our federal tax laws encourage the creation of complex capital structures. "Thinning" capitalizations by issuing corporate indebtedness offers well known tax advantages to both shareholder and corporation.' Also, since 1954, issuing preferred stock on incorporation is a standard procedure for side-stepping the "bail-out" prohibitions of code section 306. A "good" capitalization from a tax viewpoint, therefore, will often involve a small base of common stock, a heavier layer of preferred stock and as much debt as the tax adviser believes will be given tax recognition.

Tax Considerations In Selecting A Form Of Foreign Business Organization, Walter W. Brudno

Vanderbilt Law Review

The provisions of the Internal Revenue Code which are of particular relevance to the planning of foreign operations are few in number and are generally deceptively simple in phraseology. The substantive provisions consist of those sections which specify rules for determining the source of income, for calculating the credit for foreign taxes paid in respect of foreign source income, and for allowance of concessional treatment accorded Western Hemisphere Trade Corporations, United States Possessions Corporations, and China Trade Act Corporations. Measures designed to prevent tax avoidance which are of particular relevance are those which relate to acquisition of corporate control for …

Extent Of The Legislature's Reserve Power To Change Common Law Attributes Of Corporations, Edward R. Hayes

Vanderbilt Law Review

Does a stockholder have a right, at common law, to dissent and have his stock repurchased when his corporation purchases the assets of another business? If he does, is this a common law attribute of corporations? What other common law attributes may there be? To what extent has a legislature power to alter or modify these attributes, or to authorize alteration or modification by the holders of a majority of a corporation's stock? The discussion will be directed first to what attributes a corporation has apart from those bearing on its relations with its stockholders; next, to what attributes are …

State Taxation Of Corporate Income From A Multistate Business, Paul J. Hartman

Vanderbilt Law Review

There was a time when state and local taxes were perhaps only a minor factor in determining where a new business would locate and were probably not seriously considered in connection with most locational decisions. In recent years, however, because of the need for additional revenue on the part of state and local governments and the resulting increases in varieties and amounts of taxes, business must give more attention to the question of state and local taxes in deciding where to locate and operate. In this discussion of state taxation of corporate income from multi-state operations, we will include taxes …

The Tax Treatment Of Collapsible Corporations, Boris I. Bittker

Vanderbilt Law Review

Introductory.-Section 331 (a) (1) of the Internal Revenue Code provides that a complete liquidation of a corporation is to be treated by the shareholder as a sale of his stock, which will ordinarily produce capital gain or loss, and section 334 (a) provides that the shareholders' basis for property acquired on the liquidation is its fair market value at the time of distribution. These rules, which are of long standing, led to the tax avoidance device known as the "collapsible corporation," which in its turn led,in 1950, to the enactment of what is now section 341. As will be seen, …

Corporate Law Department Communications--Privilege And Discovery, Thomas R. Hunt

Vanderbilt Law Review

With the growth in number and size of corporate law departments, there is increased interest in determining the conditions and areas in which their communications' may be called for, and used, in litigation. As business becomes more complex, requiring adherence to legislation and regulation which allows small tolerance between the licit and illicit, or demanding close attention to administrative detail, the role of the lawyer is amplified. Concurrently, corporate counsel is engaged in areas where the distinction between business and legal considerations becomes decreasingly apparent.

Initial Capitalization And Financing Of Corporations, Chester Rohrlich

Vanderbilt Law Review

Since one of the varied uses to which stock purchase options maybe put is as a means of raising, or facilitating the raising, of capital, we deem it appropriate to direct attention to them. Like so many instrumentalities, they are subject to abuse and raise some difficulties, but used honestly and with discretion, they do represent a means (a) of compensating promoters and underwriters and retaining their continuing interest in the financial success of the corporation, (b) of adding speculative attraction to the security with which it is issued, or, less frequently, (c) of raising funds by direct and independent …

Business Associations--1959 Tennessee Survey, F. Hodge O'Neal

Vanderbilt Law Review

The Eighty-first General Assembly enacted a considerable number of significant statutes affecting business organizations or their activities. One of the new statutes made important changes in the Securities Law of 1955. Several of the statutes were designed, or at least professed to be designed, to encourage the commercial and industrial development of Tennessee. On the other hand, Tennessee courts handed down during the survey period only two or three opinions touching on business associations questions, and those questions were of but little importance. In general, this article discusses the statutes first, then the judicial decisions.

Interstate Compacts As A Device To Develop And Regulate Atomic Energy, W. Harold Bigham

Vanderbilt Law Review

When the Congress adopted the Atomic Energy Act of 1954, releasing the atom from federal monopoly and inviting the division of regulatory and control functions between the federal government and the states, the gates were opened for large-scale participation by private industry in the new technology. It was natural, therefore, that the states should begin to view with awakened interest the role which they are to play in the development and regulation of this new source of energy. However amorphous the role of the states may be as yet, some preparation is being made to accept the responsibilities which will …

Recent Cases, Law Review Staff

Vanderbilt Law Review

In a hearing before the Commissioner of Investigation of the City of New York, appellant refused to state whether he was then a member of the Communist Party and based his refusal to answer on the fifth amendment to the United States Constitution. He was thereafter discharged as an employee of the New York Transit Authority pursuant to provisions of the New York Security Risk Law' which allows dismissal of employees of security agencies who are found to be of "doubtful trust and reliability." Without seeking administrative remedies, appellant brought a proceeding in the state court for reinstatement contending that …

Judicial Review Of Orders Of The Interstate Commerce Commission Relating To Motor Carriers, Robert W. Ginnane, James A. Murray

Vanderbilt Law Review

When, in 1935, Congress provided for federal regulation of inter-state motor transportation by the Interstate Commerce Commission,it made applicable to the Commission's regulatory orders with respect to motor carriers the same system of judicial review which it had devised for orders relating to railroads in the Urgent Deficiencies Act of 1913.' This invoked not only the naked statutory review provisions but also, at least by analogy, the mass of judicial decisions applying the 1913 legislation to Commission orders involving railroads. The statutory provisions for review of orders of the Interstate Commerce Commission have been codified into Title 28 of the …

Stockholders' Derivative Suits In Southern Jurisdictions, W. Jack Williams

Vanderbilt Law Review

The stockholders' derivative suit has been of increasing prominence during the past several decades. As an action in equity instituted by individual stockholders, the suit is representative in nature in that the stockholder prosecutes the action for all stockholders who are similarly situated. Yet, as the suit is in behalf of the corporate entity and not the stockholders personally, it is derivative.'

As in most other areas of corporate law in southern jurisdictions,there exists no comprehensive body of statutory or case law dealing with all facets of stockholders' derivative suits. The greater part of the body of law in this …

Trading Stamps, Josiah Baker

Vanderbilt Law Review

It is as hard to define the trading stamp as it is to count the points on the circumference of a circle, for a trading stamp is what it appears to be and that, of course, depends upon point of view. To the housewife,it is a coupon--in some instances free, in others expensive--for which a redemption value may be claimed. To the stamp-issuing merchant,it is a method of advertising taking the form of a promotional device or operating as a discount to cash customers. To the nonissuing merchant, it is an instrumentality of unfair competition. To the trading stamp company, …

Competition Versus Regulation: The Agricultural Exemption In The Motor Carrier Act, Carl H. Fulda

Vanderbilt Law Review

Transportation of passengers or property by motor carriers engaged in interstate or foreign commerce has been subject to federal regulation by the Interstate Commerce Commission since 1935. At that time motor carriers in intrastate commerce were regulated in all the states of the Union by state commissions which controlled entry into the industry, rates, and safety of operations, but there was no comparable federal regulation. The Federal Motor Carrier Act of 1935, now part II of the Interstate Commerce Act,' was intended to fill this gap by creating a federal regulatory scheme similar to that provided by the states. In …

Commercial Restrictions In English Law, Edward A. Morrison

Vanderbilt Law Review

With the passing of the Restrictive Trade Practices Act, 1956, the English statute book is now furnished with a set of enactments, comprising this Act and the Monopolies Acts 1948 and 1953, which are comparable to the anti-trust legislation of the United States. The English statutes present marked dissimilarities to their American counterparts both in aim and method. In order to understand them it is necessary to consider certain divergences of emphasis on the part of English and American judges on the common law rules in which the legislation of the two countries alike is embedded, and certain aspects of …

Contracts -- 1957 Tennessee Survey, Paul J. Hartman

Vanderbilt Law Review

Breach of contract to publish advertisement--certainty of lost anticipated profits--nominal damages: The rule of "certainty" with respect to awarding damages for a breach of contract is simply a standard requiring a reasonable degree of persuasiveness in the proof of the fact of damage and of the amount of damage.' Through the use of the standard of certainty, the court is enabled to insist that the jury must have factual data--something more than guesswork--to guide themin fixing the award. Loss of commercial profits, claimed as damages for breach of contract, has become the principal field for the application of the standard …

Foreword, Sylvan Gotshal

Vanderbilt Law Review

Twenty years ago an article on arbitration would have been an oddity in a law review. Significant of the change in thinking with regard to arbitration on the part of attorneys, bar associations, and law schools is the fact that within the past few months several law journals and reviews have had major articles devoted to various aspects of arbitration. This new literature in the legal field serves as notice to the practitioner and to the law student that arbitration has come of age. The editors of the Vanderbilt Law Review and the faculty of the Law School are, therefore, …

Preparation And Presentation Of An Arbitration Case, Joseph S. Murphy

Vanderbilt Law Review

This article deals primarily with the preparation and presentation of a case in labor arbitration. However, much of what is said here is equally applicable to the preparation and presentation of a commercial case. It is clear that the comments with regard to documents, witnesses, orderly presentation, and the like are basically the same whether one is arguing that a construction contract has been breached and that the fault lies with the contractor who was guilty of delayed construction, or whether one is defending against a charge of vio- lation of an overtime clause dealing with equal distribution. In each …

Book Reviews, Robert N. Cooks, Kenneth B. Hughs (Reviewer), Jess Halstead (Reviewer), Walter P. Armstrong, Jr. (Reviewer), Howard J. Graham (Reviewer)

Vanderbilt Law Review

Current Legal Problems 1956 Edited by G. W. Keeton and G. Schwarzenberger London: Stevens & Sons, 1956. Pp. vii, 275. $5.55

reviewer: David F. Maxwell

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Some Problems of Proof under the Anglo-American System of Litigation By Edmund Morris Morgan. New York: Columbia University Press, 1956. Pp. xii, 195. $3.50

reviewer: Charles T. McCormick

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Effective Drafting of Leases with Check List and Forms By Milton N. Lieberman Newark: Gann Law Books, 1956. Pp. viii, 974

reviewer: Robert N. Cooks

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The Law and One Man Among Many By Arthur E. Sutherland Madison: University of Wisconsin Press, 1956. Pp. ix, …