Central Law Journal.

ST. LOUIS, MO., MARCH 18, 1898.

By a very recent decision, the Supreme Court of Montana has declared constitutional a statute of that State imposing a tax upon direct and collateral inheritances,-Gelsthorpe v. Furnell, 59 Pac. Rep. 267. The act was passed in 1897, and substantially provided that "all property" which should pass by will, or by the intestate laws of the State, should be subject to a tax at a fixed rate on the market value of such property; provided that an estate valued at a less sum than $7500 should not be subject to any such "tax or duty." It also provided, that the tax should be levied upon all estates which had been probated before, and should be distributed after the passage of this act; and, again, that the act should apply to all estates remaining undistributed at the time the law took effect, and that in such estates the tax should be determined and collected as in other cases. It appeared that the local authorities, in Montana, attempted to collect the inheritance tax out of an estate of a person who died a year prior to the passage of the act, but the proceeds of whose estate had not been distributed until after the law had gone into effect. The court below held that as applied to the estates of persons who might die after the law took effect, the statute was constitutional, but that where the decedent died before the passage of the act, the tax or assessment could not be collected, for as to such case the law was invalid. On appeal the lower court was reversed and the act was declared to be constitutional on all the several grounds. It was contended by those opposing the tax that the law attempts to impose a tax upon property. As to this, the court held that an inheritance or succession tax is a duty or bonus exacted in certain instances by the State upon the right and privilege of taking legacies, gifts, and successions intended to take effect at or after the death of the grantor. The burden or the tax is not imposed upon the property itself, but upon the privilege of acquiring property by inheritance. The statute provides for appraising the property to be inherited, but the object of such

valuation is not to tax the property itself. It is to arrive at a measure of price by which the privilege of inheriting can be valued. The court quoted with approval the statement made by Judge Wallace, in Wallace v. Meyers, 38 Fed. Rep. 184 (U. S. C. C.), 1889, that "such a tax is no more one upon the bonds than an income tax is one upon the property out of which the income is derived, or an excise tax is one upon the articles manufactured and sold. The bonds are the subject of appraisal, but the privilege is the subject of the tax. Inasmuch as it is lawful

for the State to withhold altogether the privilege of acquiring property within its dominion by will or inheritance, it is lawful for the legislature to annex any conditions to the privilege which may seem expedient and do not conflict with the organic law of the State, or the constitution or laws of the United States." In support of its contention on this point the court cited the following cases: State v. Hamlin, 86 Me. 495 (1894); Eyrie v. Jacob, 14 Grat. (Va.) 422 (1858); Strode v. Com., 52 Pa. 181 (1866); State v. Dalrymple, 70 Md. 294 (1889); Minot v. Winthrop, 162 Mass. 113 (1894); In re Hoffman Est., 8 Howard, 490 (1850); United States v. Perkins, 163 U. S. 625 (1896); State v. Ferris, 53 Ohio St. 314 (1895). On the question as to whether the tax violated the principle of equality and uniformity prescribed by the State constitution, it was hell that there was nothing in the act violative of that provision. The legislature is not prevented by the constitution from the exercise of discretion as to what classes of rights or privileges it may enumerate as subject to taxation, provided the tax is uniform within the class and provided the classification is based upon a reasonable, and not a mere arbitrary ground. It was further decided that, though the right to a distributive share in an estate vests in those entitled, directly upon the death of the testator or intestate, such vested rights are held subject to the conditions, formalities and administrative control prescribed by the State in the interest of public order and policy.

Laws imposing taxes upon inheritances have been sustained in Pennsylvania, New York, Maryland, Virginia, North Carolina, and recently in Illinois. Kochersperger v. Executors, 167 Ill. 122, 44 Cent. L. J. 447. They have

been held invalid in New Hampshire, Ohio, and recently in Colorado,-44 Cent. L. J. 465. In the issue of the American Law Register for February, 1898, will be found an essay on the subject of "a very bad statute," in which the writer undertakes to show that a recent Pennsylvania statute, similar to the one upheld by the Montana court, is unconstitutional.

NOTES OF IMPORTANT DECISIONS.

EQUITABLE LIEN

ADVANCES BY BANK.-In

the case of Citizens' Bank v. Adams, 84 Fed. Rep. 268, decided by the United States Circuit Court, Northern District of Illinois, it was held that a bank advancing money to stockmen for the purchase of stock, with the understanding that, according to the previous course of business, the stock would be shipped to commission merchants, sold, and the proceeds placed to the credit of the bank, for its reimbursement, is entitled to such proceeds as against the commission merchants, who are aware of the understanding and previous course of business, and they cannot appropriate such proceeds to the payment of a debt due them from the shippers. The court said: "The material facts in this case are as follows: Parsley & Markwell were buyers of cattle and shippers of the same to the stock yards at Chicago, beginning early in 1889 and running until October, 1892. They had an arrangement with the complainant whereby the complainant honored their checks for the cattle thus purchased, and thus advanced them the purchase money. During this whole period the cattle were shipped to the defendants, who were commission merchants in the Chicago Stock Yards, who, upon the receiving and selling of the same, after the deduction of their commissions, deposited the proceeds principally with the Drovers' National Bank of Chicago to the credit of the complainant. Occasionally a small amount, such as from $5 to $45, seems to have been given in currency to Markwell, and sometimes drafts and checks for considerable amounts appear to have been credited to the defendants' account as against Parsley & Markwell; but almost the entire amount of the proceeds during this period of more than three years was deposited directly to the complainant so much, at least, undoubtedly, as kept the complainant's charges on account of advances to Parsley & Markwell fully balanced. The fact that Adams & Burke during this whole period made these deposits to the credit of the complainant was unquestionably due to the arrangement between the parties to the transaction, or, at least, to the request made by Parsley & Markwell upon Adams & Burke that the proceeds should thus be dealt with. During this period, from time to time, beginning in August, 1890, and ending in November, 1891, drafts were given by

the defendants to Parsley & Markwell, for which the defendants took Parsley & Markwell's notes. These aggregated $5,000. The first note was executed by Parsley & Markwell as a firm, but upon its renewal, and at the insistence of the defendants, the note was executed, supposedly, by Parsley and Markwell each individually. This indebtedness ran along from August, 1890, until October, 1892, without any portion of it being paid, and without its existence ever having come to the knowledge of the complainant. During that whole period the defendants were receiving, each month, large amounts from the proceeds of shipments of Parsley & Markwell, and deposited the same, as usual, to the credit of the complainant. At almost any time during this period the defendants were obtaining from the shipments enough money to discharge this note. I am convinced that the defendants knew that the complainant was advancing money upon the faith of the arrangement that the proceeds should be deposited to their credit, and know, also, that any interruption of this arrangement by the withholding of proceeds to pay off these notes would lead to a rupture, and probably to a demand by the bank for a return of the fund. The last shipment made was in October, 1892, when the cashier of the complainant, in the presence and hearing of a soliciting agent of the defendants, advanced something like $8,000 upon the assurance that as soon as the stock was received in Chicago the money would be deposited to the credit of the bank to meet certain obligations that the bank was obliged to keep with another bank. The defendants, however, upon the receipt and sale of this stock, withheld sufficient to pay off their note, and deposited the balance. This bill is to compel them to account to the complainant for the sums thus withheld.

I hold, upon the ruling in Bank v. Gillespie, 137 U. S. 411, 11 Sup. Ct. Rep. 118, that as between the defendants, the commission merchants, and the complainant advancing the money, and by virtue of the understanding between them, both as evidenced by a long course of dealing and direct communication, the complainant bank was the beneficial owner and shipper of these cattle, and was, therefore, entitled to the proceeds up to the amount of its advancements."

SALE-PASSING TITLE-DELIVERY OF BILL OF LADING.—It is decided by the Supreme Court of Oregon, in Wadhams & Co. v. Balfour, 51 Pac. Rep. 642, that the presumption of law that the title to property does not pass if something remains to be done for the purpose of testing the property transferred, or fixing the amount, or putting it in condition for final delivery, until the act is done, may be overcome by the intention of the parties to the transaction. It appeared that wheat was offered by sample to a prospective buyer, who accepted it at an agreed price, and received the samples and the bill of lading therefor. The wheat was destroyed before it was in

spected. In an action to recover the agreed price from the buyer, it was shown that in all previous similar transactions the buyer inspected the grain at its destination, and claims for the variations in quantity or quality were adjusted at the buyer's dictation. It was held that there was an implied warranty that the wheat was equal in kind and quality to the sample, but that the title of the wheat passed by delivery of the bill of lading, and the right to inspection was a condition subsequent to the passing of the title, which did not relieve the buyer of liability for the price agreed on, although inspection had been made impossible. It was also held that the delivery of the bill of lading of a car of wheat, by indorsement in blank to the purchaser of the wheat, is a sufficient delivery of the said wheat to take the transaction out of the statute of frauds.

ON SURETY. It is held by the Supreme Court of Michigan, in Beath v. Chapoton, 73 N. W. Rep. 806, that one who embezzled money, and gave a note in acknowledgment of the debt, cannot defend in an action on the note on the ground that he executed it to escape a threatened criminal prosecution. The court says: "Complaint is made that the court erred in instructing the jury: 'If you find that the note was obtained from Chapoton upon threats of criminal prosecution, plaintiff cannot recover." Counsel for defendants cite only one authority to support this instruction, viz: Hackley v. Headley, 45 Mich. 574, 8 N. W. Rep. 511. The action in that case was upon a promissory note. The defense was duress, in that the plaintiffs took an unconscionable advantage of defendant's financial straits, thereby compelling him to accept $2,000 less than was his due. The defense was held bad. This case was approved and followed in Goebel v. Linn, 47 Mich. 489, 11 N. W. Rep. 284. Chapoton had been for a long time in the employ of plaintiff, who claimed that he had embezzled large sums of money. Plaintiff testified that Chapoton admitted the embezzlement; that it was agreed to amount to $2,700; that Chapoton agreed to give four notes of $675 each, and to be secured by indorsements, in settlement of the claim. He denied any threats to prosecute, and any knowledge of representations made by Chapoton to Watson. The record states that 'defendant Chapoton gave evidence tending to show that a short time before these notes were given Beath claimed that he (Chapoton) had embezzled money from the said Beath, and that he threatened to prosecute him, and put him in jail, and disgrace him; and that he would not have executed such note except for the fear of criminal prosecution, and on account of the threats so made by said Beath.' This statement is the sole foundation for claiming duress. If Chapoton had embezzled money, and notes or other evidences of debt, with security, were given by Chapoton, in settlement and acknowledgment of the debt, he could not defend upon the ground

that plaintiff threatened criminal prosecution, if his honest debt was not acknowledged and secured. Wolf v. Troxell's Estate, 94 Mich. 573, 54 N. W. Rep. 383. The law does not permit a criminal, who has stolen property, to defend against the debt, or its written acknowledgment, on the ground of threatened prosecution or imprisonment. Such a rule would often be attended with disastrous results. A party might settle his peculation by giving his notes, payable after the statute of limitations could be pleaded in bar of the original debt. If, instead of an indorsed note, Chapoton had given a note and mortgage for $2,700 (and he admits that he agreed to this amount, and to give four promissory notes therefor), would he be permitted to avoid his just liability by saying, True, I owed it, but plaintiff threatened to prosecute me if I didn't pay it, and therefore I secured my honest debt?' The consideration for the note in such cases is not the avoidance of a criminal prosecution, but the just debt. A was convicted of larceny, and sentenced to pay a fine of $1,000, and was confined in prison. He executed a mortgage to the county for $1,000, in condition of which he was pardoned. He filed a bill in equity to set aside the foreclosure sale on the ground of duress. Decree was entered for the amount actually due. Rood v. Winslow, Walk. Ch. 340, 2 Doug. 67. Where W gave a mortgage for $5,000 to settle a charge of adultery, the same defense was interposed. The securities were held valid to the amount actually due, viz: $2,000. Briggs v. Withey, 24 Mich. 136. B paid license taxes under threats of prosecution from the village attorney. The taxes were void. Held, that they were not paid under duress. Betts v. Village of Reading, 93 Mich. 79, 52 N. W. Rep. 940. See, also, Cribbs v. Sowle, 87 Mich. 347, 49 N. W. Rep. 587, and authorities there cited. 'Duress by threats exists, not wherever a party has entered into a contract under the influence of the threat, but only when such threat excites fear of some grievous wrong, as of death, or great irremediable injury, or unlawful imprisonment.' 6 Am. & Eng. Enc. Law, 64. Threats of criminal prosecution, unaccompanied by threats of immediate imprisonment, do not constitute duress. Harmon v. Harmon, 61 Me. 227; Buchanan v. Sahlein, 9 Mo. App. 552; Bodine v. Morgan, 37 N. J. Eq. 426; Dunham v. Griswold, 100 N. Y. 224, 3 N. E. Rep. 76. Threat of legal process is not duress, for the party may plead, make proof, and show that he is not liable.' Preston v. Boston, 12 Pick. 14. In Bodine v. Morgan the defendants, father and son, were charged with fraudulently taking and appropriating business orders. The father settled, and gave a mortgage of $5,000. His defense was substantially the same as that here set up. The court used the following language: "But, further, the threat to arrest him for his unlawful appropriation of their goods and orders to his own use unless he should indemnify them, constituted, if it was made, no duress; and, if the mortgage had been given under the pressure of

such a threat, it would not have affected its validity.' It was incumbent upon defendant Chapoton to establish two facts,-the illegality of the demand and the duress. Buchanan v. Sahlein, supra. Defendant Chapoton was under no physical restraint. According to his own statement, plaintiff had previously made the claim of embezzlement, and threatened prosecution if it was not settled. Chapoton telephoned to his friend Watson, requesting him to call at plaintiff's store. Watson complied, and while the three were there together the notes were executed. There is no evidence of any threats or restraint at that time, no prosecution had been commenced, nor was there any statement that any had been commenced, and he was free to go and come as he chose. It therefore appears that Chapoton, after the alleged charge and threats were made, took ample time to consider it, and then voluntarily settled by giving these notes. This is not the course pursued by a man conscious of his innocence, and in the possession of his faculties. There is nothing to show that he was young or old, inexperienced, feeble in body or mind, or unable to indignantly deny and resist a false charge of embezzlement and felony. Under this record the only question to be submitted to the jury with regard to him was whether there was a failure of consideration, in whole or in part, for the notes. Under the above decisions, he was liable upon them to the extent of moneys appropriated by him, if any were so appropriated; and it was the province of the jury to determine the amount. If he had appropriated none of the plaintiff's money of course the note was without consideration, and void."

GAMING LOTTERY-APPORTIONMENT BY LOT. -In Chaney Park Land Co. v. Hart, 73 N. W. Rep. 1058, decided by the Supreme Court of Iowa, it appeared that certain lots, contracted for by the promoters of a packing house plant, were subscribed for under an agreement to take the number set opposite the name of each subscriber, if the packing house was secured. The lots were to be apportioned "in such manner as (subscribers) may decide." At a meeting called by the promoters to divide the lots by a "method

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to be decided upon by vote of subscribers," the plan of one of the promoters was adopted; the other promoters taking no active part, and all having announced that they left the method of apportionment to the subscribers. The subscribers' names were drawn out of one box, and the numbers of the lots to correspond were drawn out of the other, by two of the subscribers agreed None of the lots were worth more than upon. the price paid. It was held that the apportionment of the lots was by the subscribers alone, and the method was not a lottery, within the meaning of Code 1873, § 4043, or Const. art. 3, § 28, prohibiting lotteries. The court said: "It is conceded that the defendant's contract for the purchase of the lot, if in pursuance of, or in promotion

of, a lottery scheme, is against public policy, and cannot be enforced. Guenther v. Dewien, 11 Iowa, 133; Seidenbender v. Charles, 8 Am. Dec. 682, and notes; 13 Am. & Eng. Enc. Law, 1187. For, if a transaction is prohibited by the statute, a contract based thereon is void. It is important, then, to determine what is a lottery, such as prohibited by the statute and constitution. Sec. 28. art. 3, Const. Iowa; Code 1873, sec. 4043. The word has not acquired a technical or legal significance differing from that of approved usage in the language. The lexicographers are agreed that a distribution of prizes by lot or chance may constitute a lottery. Worcester and the American Cyclopædia include payment of a consideration for the chance, while nearly all refer to it as a scheme. See U. S. v. Olney, 1 Deady, 461, Fed. Cas. No. 15,918. To bring the transaction within the meaning of the statute prohibiting lotteries, something of value must be parted with, directly or indirectly, by him who has the chance. Yellowstone Kit v. State, 88 Ala. 196, 7 South. Rep. 338; Id., 16 Ann. St. Rep. 38, and extended note; Cross v. People, 18 Colo. 321, 32 Pac. Rep. 821. The authorities uniformly refer to a lottery as a scheme. Bishop defines it as a scheme by which. on one's paying money, or some other thing of value, he obtains the contingent right to have something of greater value, if an appeal to chance, by lot or otherwise, under the direction of the manager of the scheme, should decide in his favor.' Bish. St. Crimes, sec. 952. The accepted definition of the Court of Appeals of New York is found in Hull v. Ruggles, 56 N. Y. 424, approved in Wilkinson v. Gill, 74 N. Y. 63: Where a pecuniary consideration is paid, and it is to be determined by lot or chance, according to some scheme held out to the public, what and how much he who pays the money is to receive for it. that is a lottery.' In Rothrock v. Perkinson, 61 Ind. 39, the court says: 'It is well settled in this State that every scheme for the division or disposition of property or money by chance, or any game of hazard, is prohibited by law, and that every contract or agreement in aid of such a scheme is void.' The Supreme Court of Michigan defines a lottery as a scheme by which a result is reached by some action or means taken. and in which the result of man's choice or will has no part, nor can human reason, foresight. sagacity or design enable him to know or deter mine such results until the same has been accomplished.' People v. Elliott, 74 Mich. 264, 41 N. W. Rep. 916. So, in State v. Clarke, 33 N. H. 329: 'Where a pecuniary consideration is paid. and it is determined by lot or chance, according to some scheme held out to the public, what the party who pays the money is to have for it, or whether he is to have anything, it is a lottery. within the meaning of the statute.' See also Lynch v. Rosenthal (Ind. Sup.), 42 N. E. Rep. 1103, 13 Am. & Eng. Enc. Law, 1164. It thus appears that there must be some plan or scheme. on the part of the promoters of the enterprise

alleged to be unlawful, for the sale or disposition of property by lot or chance, before it can be said to have the character of a lottery. If the sale is without the purpose that the property, or any part of it, shall be obtained by the purchaser through chance, and this does not result from the nature of the transaction, then it is not so tainted. The sale of the lots to the subscribers in this case was not in pursuance of any design to promote a lottery, or in evasion of the law. Each subscriber contracted as he had the right to do-for the purchase of one or more of the lots, with the understanding that they should be apportioned as the subscribers themselves might determine. Having agreed to buy before the land was platted -induced by a desire to aid an enterprise of anticipated advantage to the city-they concluded, after much discussion, and the proposal of other plans, to make the selection by drawing the number of a lot and a name from different boxes at the same time. We know of no good reason why these purchasers did not have the right to divide their property, or that contracted for, according to their own notions and agreement. We have discovered no authority denying them that right, but, on the contrary, it is recognized in Com. v. Manderfield, 8 Phila. 457; 2 Whart. Cr. Law, sec. 1891; Yellowstone Kit v. State, supra. Joshua so apportioned the promised land among seven tribes of the children of Israel. The disciples of Christ chose Matthias to succeed Judas by casting lots. Under the laws of this State, the right to an office is determined, when there is a tie vote, by the same method. Code, sec. 1169. There was nothing in the transaction opposed to good morals, and it was not a lottery, within the meaning of the law. Without a scheme or plan to distribute by chance, on the part of the promoters, the vital part of a lottery was lacking. The evidence fails to show that any fraud was practiced as to this defendant."

MASTER AND SERVANT-FELLOW-SERVANTS— WHO ARE. The Supreme Court of Appeals of Virginia hold. in Norfolk & W. R. Co. v. Houchin's Admr., 28 S. E. Rep. 578, that in the absence of a statutory enactment, the master's liability for the negligent act of one servant against another is determined solely by the question whether the act of the negligent servant was in the performance of a duty imposed by the common law upon the master toward the injured servant, and not whether the negligent servant had been placed by the master in a position of superior grade, or in authority and control over the injured servant. Hence a conductor and a brakeman are fellowservants, so as to preclude a recovery from the railroad company for a brakeman's death, where it was caused by the negligence of the conductor in running the train in violation of rule. The court says inter alia: "The rule known as the rule of superior servant'-that is, where the negligent servant is in grade of employment superior to the injured one, or where one servant is placed

by the master in a position of subordination, and subject to the orders and control of another, in such a way and to such an extent that the servant so placed in control may reasonably be regarded as representing the master as his alter ego or viceprincipal, and the inferior servant is injured by the negligence of the superior servant, the master is liable-originated, it may be said, in the case of Railway Co. v. Ross, supra, and nearly all the decisions of the other courts holding to the doctrine that a conductor of a train was a vice-principal standing in the shoes of his master, because given authority and control over his train, and of the other employees on it, etc., are traceable to the Ross Case as the authority upon which the decision mainly rested. But the doctrine enunciated in the Ross Case has, as we have before said, been overthrown by the more recent decisions of the United States Supreme Court, among which are: Railroad Co. v. Baugh, 149 U. S. 368, 13 Sup. Ct. Rep. 914; Railroad Co. v. Hambly, 154 U. S. 349, 14 Sup. Ct. Rep. 983; Railroad Co. v. Keegan, 160 U. S. 259. 16 Sup. Ct. Rep. 269; Railroad Co. v. Peterson, 162 U. S. 346, 16 Sup. Ct. Rep. 843; Railroad Co. v. Charless, 162 U. S. 359, 16 Sup. Ct. Rep. 848; Oakes v. Mase, 165 U. S. 363, 17 Sup. Ct. Rep. 345; Martin v. Railroad Co., 166 U. S. 399, 17 Sup. Ct. Rep. 603. In the last case only Justice Harlan dissented. See also Mining Co. v. Whelan (recently decided by the United States Supreme Court, not yet officially reported), 18 Sup. Ct. Rep. 40.

In the case of Railroad Co. v. Peterson, supra, the court carefully reviews the subject, and holds that a foreman of a gang of laborers, having in charge the superintendence of the gang in working, with power to hire and discharge hands, and exclusive charge of their direction and management in their employ, is a fellow-servant, in fact and in law, with others of the gang, and that the company is not liable for an injury received by one of them from the negligence of the foreman because of their fellow-servantcy. The syllabus in that case is: (1) That the mere superiority of the negligent employee in position and in power to give orders to subordinates is not a ground for such liability. (2) That, in order to form an exception to the general law of non-liability, the person whose neglect caused the injury must be one who was clothed with the control and management of a distinct department, and not of a mere separate piece of work in one of the branches of service in a department. (3) That, when the business of the master is of such great and diversified extent that it naturally and necessarily separates itself into departments of service, the persons placed by the master in charge of these separate branches and departments, and given control therein, may be considered, with reference to employees under them, vice-principals and representatives of the master, as fully as if the entire business of the master were placed by him under one superintendent.

Elliott, in his recent work on Railroads (volume