Central Law Journal

St. Louis, Mo., August 18, 1922

CONDITIONS IN CONTRACTS IM

PLIED BY LAW.

The general rule is that where there is a positive contract to do a thing net in itself unlawful the contractor must perform it or pay damages for not doing it. although, in consequence of unforeseen accidents, the performance of his contract has become unexpectedly burdensome or even impossible.

To this general rule there are three exceptions, which are laid down briefly in the case of Middlesex Water Company v. Knappmann-Whiting Company, 64 N. J. L. 240, 251, 45 Atl. 692, 49 L. R. A. 572, 81 Am. St. Rep. 467, as follows: First, where the subsequent impossibility is imposed by law; secondly, where the continued existence of something essential to the performance is an implied condition of the contract; thirdly, in contracts for personal services in which there is generally the implied condition that the person who is to render the service is alive.

The leading English case on the subject is that of Taylor v. Caldwell, 3 Best & Smith 826, decided by the Court of Queen's Bench in 1863. In that case the defendants agreed to let the plaintiffs have the use of a music hall on four days, and previously thereto the hall was destroyed by fire without the fault of either party. The Court implied a condition, holding "that the parties shall be excused in case, before breach, performance becomes impossible from the perishing of the thing without the fault of the contractor."

Likewise, in the leading New York case of Stewart v. Stone, 127 N. Y. 500, where defendant agreed to deliver cheese and butter to plaintiff to be manufactured from milk supplied by the plaintiff in a particular factory owned by defendant, and where

the factory was later destroyed without defendant's fault, the Court held that the defendant was by force of the implied condition to which his contract was subject relieved from liability for the consequences of his failure to perform.

In the recent case of Scialli v. Correale, 117 Atl. 255, decided by the Court of Errors and Appeals of New Jersey, it appeared that the plaintiff contracted to sell the defendant certain grapes which were described in the contract as "being part of the same grapes contracted to be purchased by the said party of the first part from one Antonio Pirone by agreement, dated March 1, 1920, a copy of which said agreement is hereto annexed." Plaintiff's vendor, Pirone, failed to deliver the grapes to plaintiff in accordance with their contract, and plaintiff claimed that this relieved him from any obligation to make delivery of the grapes contracted to be sold by him to the defendant. The Court upheld this contention, and held that plaintiff was not liable to defendant for failure to supply the grapes, declaring that, where the continued existence of something essential to the performance is an implied condition of the contract, performance is excused."

66

The rule applied in these cases, stated in different language is this: Where, from the nature of the contract, it appears that the parties must, from the beginning, have known that it could not be fulfilled unless, when the time for the fulfillment of the contract arrived, some particular, specified thing continued to exist, so that when entering into the contract they must have contemplated such continued existence as the foundation of what was to be done.

Contrary to the general rule is the case of Imbeschied v. Lerner, 135 N. E. 219, decided by the Supreme Judicial Court of Massachusetts, and referred to in 95 C. L. J. 40. This was an action for rent of premises leased for the purpose of carrying on the liquor business, and the defense was that the lessee was relieved from liability

There is a very interesting article on the effect of the adoption of Prohibition upon liquor leases, by W. W. Thornton, in 94 C. L. J. 40. Mr. Thornton there calls attention to the distinction between a "permissive" and a "restrictive" lease; the latter being a lease restricting the use of the premises to selling and drinking intoxicat-ing liquors. It will be noticed, however, that in the New York case of Kaier v. Zeigler, 187 N. Y. Supp. 638, where premises were leased to be used as a saloon and hotel, the Court held that the lease was terminated by the adoption of the Eighteenth Amendment. The Arkansas case of Kahn v. Wilhelm, 118 Ark. 239, 177 S. W. 403, holds similarly as to the effect of a city ordinance making it unlawful to sell intoxicating liquor in leased premises, upon a lease of "premises as a hotel and saloon. and for no other purpose whatever."

NOTES OF IMPORTANT DECISIONS.

EMPLOYEE REPAIRING EQUIPMENT WITHDRAWN FROM USE NOT ENGAGED IN INTERSTATE COMMERCE-An employee repairing a locomotive previously used in interstate commerce, but which had been placed in the shop for general repairs, which took more than two months' time, was not engaged in interstate commerce, and accordingly was entitled to recover compensation under the State Workmen's Compensation Act for injuries received while so employea. Industrial Accident Commission v. Payne, 42 Sup. Ct. 489.

"Commerce is movement, and the work and general repair shops of a railroad, and those employed in them are accessories to that movement, indeed, are necessary to it, but so are all attached to the railroad company, official, clerical or mechanical.

Against such a broad generalization of relation we, however, may instantly pronounce and successively against lesser ones, until we come to the relation of the employment to the actual operation of the instrumentalities for a distinction between commerce and no commerce. In other words, we are brought to a consideration of degrees, and the test declared, that the employe at the time of the injury must be engaged in interstate transportation or in work so closely related to it as to be prac tically a part of it, in order to displace state jurisdiction and make applicable the federal act. And there is a difference in the instrumentalities. In some, the tracks, bridges and roadbed and equipment in actual use, may be said to have definite character and give it to those employed upon them. But equipment out of use, withdrawn for repairs, may or may not partake of that character according to circumstances, and among the circumstances is the time taken for repairs-the duration of the withdrawal from use. Illustrations readily occur. There may be only a placement upon a sidetrack or in a roundhousethe interruption of actual use, and the return to it, being of varying lengths of time, or there may be a removal to the repair and construction shops, a definite withdrawal from service and placement in new relations; the relations of a workshop, its employments and employees having cause in the movements that constitute commerce but are not immediate to it.

"And it is this separation that gives character to the employment, as we have said, as being in or not in commerce. Such, we think, was the situation of the engine in the present case. It was placed in the shop for general repairs on December 19, 1918. On February 25, 1919, after work upon it, it was given a trial and it was placed in service on March 4, 1919. The accident occurred on February 1st of that year, the engine at the time being nearly stripped and dismantled. "It was not interrupted in an interstate haul to be repaired and go on." Minneapolis & St. Louis R. R. Co. v. Winters, 242 U. S. 353, 356, 37 Sup. Ct. 170. 171 (61 L. Ed. 358, Ann. Cas. 1918B, 54): Chicago, K. & S. Ry. Co. v. Kindlesparker, 246 U. S. 657, 38 Sup. Ct. 425, 62 L. Ed. 925."

WHEN A GENERAL GIFT OF INCOME AMOUNTS TO A GIFT OF THE PRINCIPAL.— A testamentary gift of property, without limitation of time and no gift over of principal, is held, in In Re Sackett's Will, 194 N. Y. Supp. 108, to be a gift of the corpus as well as the income. The following extensive quotation is taken from the opinion in the case:

"But, even though it were to be said that a gift of income only was attempted by the third clause of the will, such a gift, when made for no specified period of time, and with no conflicting disposition of the fund, would carry the corpus as well as the income. In the case of Hatch v. Bassett, 52 N. Y. 359, 362, the court held that

'A general gift of the income arising from personal property, making no mention of the principal, is equivalent to a general gift of the property itself.'

"And in matter of Smith et al., 131 N. Y. 239, the court says:

"The rule that the gift of the income of property is a gift of the property itself only applies when there is no limitation of time attached to the gift.'

"And the court then adds:

'A gift of income followed by a gift over of the corpus on the happening of a contingency, or on the death of the beneficiary. *** i a gift of the income for the intermediate period only.'

"See, also, Sherman v. Richmond Hose Co, No. 2, 101 Misc. Rep. 62, 166 N. Y. Supp. 586.

"Our own Appellate Division had the question before it in Matter' of Ingersoll, 95 App. Div. 211, 212, 88 N. Y. Supp. 698, 699, where Jenks, J., writing for the court, uses the following language:

"The testator directs that one-half of the rest, residue and remainder of his estate be held in trust, be invested, and that the income and so much of the principal as shall be deemed necessary be applied to the education, maintenance and support of his grandnieces and grandnephews. There is no other disposition of such moiety. I think that there is a gift of the principal of that one-half to the said beneficiaries. Earl v. Grim, 1 Johns. Ch. 494; Paterson v. Ellis, 11 Wend. 260, 298; Smith v. Post, 2 Edw. Ch. 523, 526; Hatch v. Bassett, 52 N. Y. 359, 362; Bishop v. McClelland, 44 N. J. Eq. 450; Matter of Smith, 131 N. Y. 239. In Bishop v. McClelland, supra, the Vice Chancellor says: "There can be no doubt that a gift of the interest, income or produce of a fund, without limitation as to continuance, or without limit as to time, will, according to a settled rule of construction, be held to pass the fund itself, and this will be the effect given to a gift made in this form, whether the gift be made directly to the legatee or through the intervention of a trustee.'

"I quote the following extract from the opinion of Surrogate Slater, of Westchester County, in Re Allen's Will, 111 Misc. Rep. 93, 125, 181 N. Y. Supp. 398, 418:

'A gift of income tends to vest in the beneficiary the capital of which the income is

given. Cammann v. Bailey, 210 N. Y. 19, 103 N. E. 824. 'It is a well-settleu rule, both in this Jurisdiction and in England, that a gift of income of property, without limitation with respect to the time of enjoyment, with no other disposition of the corpus, is intended as a gift of the corpus.'

TAX ON LIQUOR DEALERS UNDER PROHIBITION ACT HELD TO BE A PENALTY.— In the case of Lipke v. Lederer, 42 Sup. Ct. 549, the Supreme Court of the United States had before it a provision of the National Prohibition Act, title 2, section 35, which imposes a tax on a dealer for a violation of the law prohibiting the sale of intoxicating liquors as a beverage, the tax being double the retail dealers' tax imposed by Statute, section 3244, and an additional penalty of $500.00. This tax and penalty, however, give no right to continue the business in the future, and is imposed only on evidence that a crime, as defined by title 2, section 29, has been committed. The Court holds that this lacks all the ordinary characteristics of the tax, whose function is to provide for the support of the Government, and clearly involves the idea of punishment for infraction of the law, which is the definite function of the penalty. We quote briefly from the opinion as follows:

"The mere use of the word 'tax' in an act primarily designed to define and suppress crime is not enough to show that within the true intendment of the term a tax was laid. Bailey v. Drexel Furniture Co., 42 Sup. Ct. 449. (May 15, 1922). When by its very nature the imposition is a penalty, it must be so regarded. Helwig v. United States, 188 U. S. 605, 613, 23 Sup. Ct. 427, 47 L. Ed. 614. Evidence of crime (section 29) is essential to assessment under section 35. It lacks all the ordinary characteristics of a tax, whose primary function 'is to provide for the support of the government' and clearly involves the idea of punishment for infraction of the law-the definite function of a penalty. O'Sullivan v. Felix, 233 U. S. 318, 324, 34 Sup. Ct. 596, 58, L. Ed. 980."

A prosperous barrister was recounting his career at a dinner party.

"When I took my first brief," said he, "I was very nervous and excited, especially as my client was a bad egg. He was a man of good family, whose name would have been fatally tarnished had the rascal been convicted. Luckily, I managed to get the beggar off."

After dinner a millionaire entered. He was a friend of the host, who presented the K. C. to him.

"I do not need to be introduced to this gentleman," observed the millionaire, patronizingly. "I met him long ago; in fact, I gave him a start in life. In fact, I was his first client." The noisy hilarity which greeted the announcement was never explained to the late comer.-London Telegraph.

FEDERAL EMPLOYERS' LIABILITY ACT, WORKMEN'S COMPENSATION ACT, OR COMMON LAW-WHICH?

By William R. Schneider of the St. Louis Bar.*

A perplexing question that frequently confronts the legal representative of the common carrier by railroad and the personal injury practitioner, is whether his case is governed by the Federal Employers' Liability Act1 the State Workmen's Compensation Act or the common law as modified by state statutes other than compensation acts.

Not infrequently is suit filed under the common law or claim made for compensation under the Workmen's Compensation Act, and after the two years' period of limitation has expired it is determined that the remedy should have been sought under the Federal Employers' Liability Act, whose jurisdiction is exclusive. The

reverse

of this situation also obtains: namely, the remedy is sought under the Federal Employers' Liability Act, and after the usual six months' period of limitation provided by most compensation acts has expired it is determined that the personal injury was not received while the person injured was engaged in interstate commerce though he was an employee of a common carrier by railroad whose activities in part constituted such commerce. The compensation Acts of some states do not apply to the intrastate or non-interstate commerce activities of common carriers by railroad. Though the problem also obtains in such states as well as in the remaining six so-called common law states which do not have compensation acts. In both of the latter cases the question is whether the case is governed by the Federal Employers' Liability Act or the common law as modified or unmodified by state statutes other than compensation acts.

*Mr. Schneider is the author of a new two-volume work entitled Workmen's Compensation Law. (1) Sections 8657-8665 United States Compiled Statutes 1916.

(2) N. Y. Cent. R. R. v. Winfield 244 U. S. 147.

Since the jurisdiction of the Federal Employers' Liability Act is exclusive the purpose of this article is to touch briefly upon the principal factors that determine whether a case comes under the comparatively narrow scope of that act, rather than to seek to determine whether it falls within the wider field covered by the compensation acts and the common law.

In the case of Lamphere v. Oregon R. & general rule by which to determine whethNav. Co. et al.3 the court gives the following er a case comes within the Federal Employers' Liability Act:

The test question in determining whether a personal injury to an employee of a railroad company is within the purview of the act is, What is its effect upon interstate commerce? Does it have the effect to hinder, delay or interfere with such commerce? As applied to the present case, it is this: Was the relation of the employment of the deceased to interstate commerce such that the personal injury to him. tended to delay or hinder the movement of a train engaged in interstate commerce? To that question we think there can be but one answer. Under the imperative command of his employer, the deceased was on his way to relieve, in the capacity of a fireman, the crew of a train which was carrying interstate commerce, and the effect of his death was to hinder and delay the movement of that train. In our opinion the complaint states a cause of action under the Employers' Liability Act."

In a case in which a workman, employed by a railroad engaged in interstate commerce, was carrying bolts to be use in the repair of a railroad bridge and was run down and injured by an intrastate passenger train, the Supreme Court of the United States said:4

"The true test always is: Is the work in question a part of the interstate commerce in which the carrier is engaged? Among the questions which naturally arise in this connection are these: Was that work being done independently of the interstate commerce in which the defendant was engaged, or was it so closely connected therewith as to be a part of it? Was its

(3) C. C. A. 9th Dist., 196 Fed. 336. (4) Pedersen v. Del. Lack. & West R. R. 229 U. S. 146.

performance a matter of indifference so far as that commerce was concerned, or was it in the nature of a duty resting upon the carrier? The answers are obvious. Tracks and bridges are as indispensable to interstate commerce by railroad as are engines and cars, and sound economic reasons unite with settled rules of law in demanding that all these instrumentalities be kept in repair. We are of the opinion that the work of keeping such instrumentalities in a proper state of repair while thus used, is so closely related to such commerce as

to be in practice and in legal contemplation

a part of it."

In the more recent case of Philadelphia & Reading Railway Co. v. Di Donato the Supreme Court approves the rule set out in the Pedersen case, and in substance holds that a watchman employed on an interstate railroad at a public grade crossing to signal both intrastate and interstate trains and guard the tracks against disorder and obstruction is employed in interstate commerce, irrespective of the interstate or intrastate character of the particular train he may be flagging when injured.

In a case where an employee when injured was engaged in inspecting and repairing cars in a yard, some of which cars were being prepared for use in interstate and some in intrastate commerce it was held that he was employed in interstate commerce within the meaning of the act.6 In this case the court quoted the following from Kinzell v. Chicago etc. Ry Co.: "It is also settled that the doing of work which has for its immediate purpose the farthering of the conduct of interstate commerce constitutes an employment in such commerce within the meaning of the act."

Where a car inspector going to the relief of another employee stumbled over some large clinkers in his path while carrying a jack for raising a derailed car, it was held that he was engaged in interstate commerce, the purpose being to open the way to interstate transportation.8 Southern Ry. Co. v. Puckett.

(5) 256 U. S. 327, decided May 16th, 1921.

(6) Hines, Director General of Railroads v. Logan., C. C. A. Fifth Circuit, Dec. 1920, 269 Fed. 105. (7) 750 U. S. 130. (8) 244 U. S. 571.

In the case of Pecos & N. T. Ry. Co. v. Rosenbloom it was held that one employed as a railway ticket clerk and required to be in and at a switch yard in order to take and preserve a record of numbers on outgoing cars, and to seal those which needed it, was engaged in interstate commerce.

It has been held that where a locomotive engineer, after completing yard shifting movements in furtherance of interstate commerce, was injured while taking his engine to the roundhouse, either to put it up

for the night or to receive further orders, he was engaged in interstate commerce within the meaning of the act.10

The fact that the injury was caused by the negligent act of an employee not engaged in interstate commerce is immaterial.

11

Often work is so remotely related to interstate commerce that one injured therein, while in the employment of a common carrier by rail, cannot obtain relief under the act. So it has been held that no recovery could be had under the act where an employee was killed while on his way to work on a crane used for unloading coal cars so as to create a coal reserve to be used in both interstate and intrastate commerce in case of a threatened strike. The court said: "On the stipulated fact that the coal had reached its destination prior to being unloaded, the learned trial judge held that it had lost its character of interstate com merce, and that in consequence the crane, when, some time afterward, it handled the coal, was not an instrumentality of commerce of that kind, resting his decision on C., B. & Q. R. R. Co. v. Harrington, 241 U. S. 177 and Lehigh Valley R. R. Co. v. Barlow, 244 U. S. 183.

"In these cases both injured employees being members of switching crews-the Supreme Court held that the several acts of switching coal cars from storage tracks to coal sheds where later the coal was to be unloaded and placed in bins or chutes for