Augustus John Cuthbert Hare.

The Central law journal, Volume 28 online

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dependent, in the purchase of American rail-
road shares, upon the good faith and honesty
of the seller. An attempt is being made by
a company called ^'The English Association
of American Bonds and Shareholders," to
confer the character of negotiability upon
such sec ari ties, by a series of registrations in
the tiame of the association and the issue of
a new certificate, which upon its face is de-
clared a negotiable instrument. Whether
such an arrangement will be effectual in mak-
ing shares legally negotiable withii>the decis-
ion of Mr. Justice Manisty remains to be
seen. Probably at some future time the na-
ture of the certificates of the association will
be considered in the courts, and it will be in-
teresting to see how far the attempt to create
negotiable securities out of securities which
are not negotiable has been successful.



The Indiana legislature at its last session
passed an act, intended to relieve the su-
preme court of that State, providing for a
commission or an additional court, to be
selected by the legislature to whom should be
assigned for consideration and decision cases
before the supreme court. It will doubtless
be remembered that the contest upon this act
partook largely of a political character, and
in connection with its passage and enforce-
ment certain sensational scenes were en-
acted, which, by many, were thought not to
comport with the dignity of the subject. This
act has now been declared unconstitutional
by the supreme court, upon the ground that
the people have a right to the couri» estab-
lished by and under the constitution, and
this constitutional right the legislature can

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neither alter nor abridge. Constitutional
tribunals can not be changed by legislation,
and the supreme court is a constitutional tri-
bunal. It can be composed of judges only,
for only judges can constitute a court. No
part of the judicial duties of that court can
be assigned to any other person than one of
the duly chosen judges. The legislature
has no power to change its organization, nor
can that body under the guise of creating
commissioners divide the duties of the judges,
nor authorize it to be done. Under the con-
stitution, as amended, the legislature may
establish courts, but it cannot destroy the
constitutional courts, nor can it change their
organization, nor redistribute their powers,
for these courts owe their organization to
the constitution, and as the constitution has
ordained that they shall be organized, so they
shall be. In other words, that judicial power
distributed by the constitution is beyond leg-
islative control.



NOTES OF RECENT DECISIONS.



A question of the liability of stockholders
came before the Supreme Court of the United
States in Bank of Fort Madison v. Alden, 9
S. C. Rep. 332. There, a number of persons
owning timber lands formed a corporation
for the manufacture and sale of lumber, and
the lands were conveyed to a trustee for the
benefit of the corporation according to an
agreement by which each member was to re-
ceive stock in proportion to his individual in-
terest in the lands, the trustee accepting such
lands in full payment of the shares issued.
A creditor of the corporation sought to en-
force the liability against a stockholder on
the ground that the land conveyed by him in
payment for his stock was worth much less
in cash than the value of the stock, and hence
that his subscription to the land was unpaid
to the extent of the deficit. The court held
that the creditor, having had full knowledge
of the facts, could not maintain such an ac-
tion, and says :

The parties who became stockholders had, pursuant
to a previous agreement, conveyed their lands to a
trustee, in trust for the corporation formed, upon an
understanding that stock should be issued to them in
proportion to their individual interests in the prop-
erty. The subscription was made upon this arrange-



ment, and the parties acted with fuU knowledge of the
conditions on which the property was to be transferred
to a trustee, and the stock was to be issued to them.
There was no attempt to pass off the property as dif-
ferent or more valuable than it was. There was no
deception or misrepresentation of any kind in the case.
No demand, therefore, against the estate of the de-
ceased Waterman can be sustained upon the assump-
tion that by the conveyance of his land he had not
paid lip all that he contracted or was bonnd to pay by
his subscription. There was no credit given by the
bank to the company upon any representation of a
different set of facts than that which actually existed.
The bank was owned by two of the stockholders of the
company, Brewster and Smith, who had participated
in, and had been well advised of, all that was done by
the company. They held all the shares of the bank,
and were respectively its president and cashier. Such
being the case, the answer to the claims of the bank is
found in the decision of this court in Colt v. Amalga-
mating Co., 119 U. S. 848, 7 S. 0. Rep. 281. There the
holder of a Judgment against the corpcmition, being
unable to obtain its satisfaction upon execution, and
finding the company was insolvent, brought suit to
compel the stockholders to pay what he claimed to be
due and unpaid on the shares held by them. He con-
tended that the valuation put upon the property taken
for such stock was illegally and fraudulently made at an
amount far above its actual value, but the court said:
*'If it were proved that actual fraud was committed in
the payment of the stock, and that the complainant
had given credit to the company from a belief that its
stock was fully paid, there would undoubtedly be
substantial ground for the relief asked. But where
the charter authorizes capital stock to be paid in
property, and the shareholders honestly and in good
faith put in property instead of money in payment of
their subscriptions, third parties have no ground of
complaint. The case is very different from that in
which subscriptions to stock are payable in cash, and
where only a part of the Installments has been paid.
In that case there is still a debt due to the corporation,
which, if it become Insolvent, may be sequestered in
equity by the creditors as a trust fund liable to the
payment of their debts. But where full paid stock is
issued for property received, there must be actual
fraud in the transaction to enable creditors of the cor-
poration to call the stockholders to account."



The question of infantile negligence or de-
gree of care required of children, was con-
sidered by the Supreme Courts of Indiana
and Ohio in Brazil Block Coal Co. v. Young,
20 N. E. Rep. 423, and Cleveland Rolling
Mill Co. V. Corrigan, 20 N. E. Rep. 466.
The Indiana court says :

The authorities do make a distinction, and with
sound reason, between children and adults. PerKOOH
of tender years must not be set to work in dangerous
places by their employers, without due wamipg and
Instruction. Indeed, it is not always that warring and
instruction will absolve the master. Hill v. Gust, 55
Ind. 45} Binford v. Johnston, 82 Ind. 426; Pennsyl-
vania Ck>. V. Long, 94 Ind. 250; Engine Works v. Ran-
dall, 100 Ind. 298; Railroad Co. v. Pitzer, 109 Ind. 179,
6 N. E. Rep. 810, and 10 N. E. Rep. 70; Railroad Co.
V. Fort, 17 Wall. 558; €k>ombs v. RaUroad Go., 102
Mass. 572; Sullivan v. Manufacuring Co., 118 Mass.
896. **Notioe of danger," says Dr. Wharton, in dis



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eoMring this quastloD, **iB not enough. . The child must
have sufficient instruction to enable him to avoid the
danger." Whart. ^ef^, f 216. Not very different is
the opinion of Mr. Wood, who says: **But in the case
of young children a mere warning is not the measure
of the master's duty. He must instruct hip as to the
methods of working with and about It, and it is negli-
gence per se for him to put such a person to work with
or in the vicinity of dangerous machinery until he has
been made to understand the methods of using it as
well as the hazards incident to Its use." Wood, Mast.
& Serv. f 850. The authorities to which we have re-
ferred do establish the doctrine that the master's duty
is much broader in cases where young children are
employed than in cases where the employees are of
full age, but they do not fully determine the question
before us, for that question is whether, ooncedinc: the
duty to exist, any breach is shown. We suppose it .to
be dear that when a plaintiff charges a defendant with
a negligent breach of duty he must state facts from
which actionable negligence can be inferred, for the
general rule is that negligence cannot be presumed.
This general rule is uniformly applied to employers
and employees, and it is presumed that the employer
has done his duty. Railway Co. v. Sanford, supra;
Pennsylvania Co. v. Whitcomb, 111 Ind. 212, 12 K. £.
Bep. 880. This presumption is, in effect, a prima facte
case in favor of the employer. Railway Co. v. Thomp-
son, 107 Ind. 442, 8 N. E. Rep. 18, and 9 N. £. Rep.
866. To defeat the presumption of duty performed it
is necessary to state facts rebutting that presumption,
otherwise there can be no cause of action. A violation
<tf duty must therefore be shown, otherwise the com-
plaint must be adjudged to be bad. This is so because
culpable negligence cannot be presumed in aid of a
complaint. Railway Co. v. Brannagan, 75 Ind. 490;
Railway Co. v. Greene, 106 Ind. 279, 6 N. E. Rep. 603.
The averment that there ^as no contributory negli-
gence absolves the plaintiff from fault, but it does not
show actionable negligence on the part of the defend-
ant. It Is one thing to show the plaintiff free from
fault, and quite another to show the defendant in
fault. The averment that the plaintiff and his son
were free from negligence is not sufficient to cover the
question here presented. Railway Co. v. Sanford,
supra. The question here is, does the complaint show
such fault on the part of the employer as to vest the
employee With a cause of action? In order to show
the defendant guilty of an actionable tort the complaint
should have averred one oi three things : First, that
(he plaintiff's son was too young to be put to the ser-
vice he was required to perform; or, second, that
neither he nor the plaintiff had notice or knowledge of
the augmented danger caused by the master's neglect;
or, third, that the master, knowing the age and inex-
perience of the child, neglected to give him the neces-
sary warning and instruction.

The Ohio court says :

We have found no decision of this court upon the
subject of the contributory negligence of infants, or
the measure of care required of them in such cases.
Elsewhere the cases are conflicted. Each of three dif-
ferent rules on the subject has found judicial sanction.
One rule requires of children the same standard of
care» judgment and discretion, in anticipating and
avoiding injury, as adults are bound to exercise. An-
other wholly exempts small children from the doctrine
of ooBtrlbutory negligence. Between these two ex-
tremes a third and more reasonable rule has grown
into favor» and is now supported by the great weight
•f authority, whieh is that a child is held to no greater



care than is usually possessed by children of the same
age. Authors and judges, however, do not always
employ the same language in giving expression to the
rule. In Beach, Contrib. Neg. f 46, it is thus expressed :
''An infant plaintiff who, on the one hand, is not so
young as to escape entirely all legal accountability,
and, on the other hand, is not so mature as to be held
to the responsibility of an adult, is, of course, in easei
involving the question of negligence, to be held re-
sponsible for ordinary care; and ordinary care must
mean, in this connection, that degree of care and pru-
dence which may reasonably be expected of a child."
The decisions enforcing this rule— that children are to
be held responsible only for such degree of care and
prudence as may reasonably be expected of them,
taking due account of their age and the particular dr-
cumstances— are very numerous. "It is well settled,"
says Mr. Justice Hunt, in Railroad Co. v. Stout, 7
Wall. 657, <Hhat the conduct of an infant of tender
years is not to be judged by the same rule which gov-
erns that of an adult. • « * The care and caution
required of a child is according to his maturity and
capacity only; and this is to be determined, in each
case, by the circumstances of that case." In 1 Shear.
AlELNeg. f 73, it is said to be "now settled by the
overwhelming weight of authority that a child is held,
so far as he is personally concerned, only to the exercise
of such care and discretion as is reasonably to be ex-
pected from children of his age.*' "A child is only
bound to exercise such a degree of care as children of
his particular age may be presumed capable of exer-
cising." Whit. Smith, Neg, 411. This rule «ppem
to rest upon sound reasons, as well as authority. To
constitute contributory negligence in any case, there
must be a want of ordinary care, and a proximate
connection between such want of care and the injury
complained of; and ordinary care is that degree of
care which persons of ordinary care and prudence are
accustomed to use under similar circumstances. Chil-
dren constitute a class of persons of less discretion and
judgment than adults, of which all reasonably informed
men are aware. Hence ordinarily prudent men rea-
sonably expect that children will exercise only the care
and prudence of children; and no greater degree of
care should be required of them than is usual, under
the circumstances, among careful and prudent persons
of the class to which they belong. We think it a sound
rule, therefore, that, in the application of the doctrine
of contributory negligence to children, in actions by
them, or in their behalf, for injuries occasioned by the
negligence of others, their conduct should not be
judged by the same rule which governs that of adults;
and, while it is their duty to exercise ordinary care
to avoid the injuries of which they complain, ordinary
care for them is that degree of care which children of
the same age, of ordinary care and prudence, are ac-
customed to exercise under similar circumstances.



The noD-enf orceability of a subscription to
a church fund is well illustrated in the case of
Presbyterian Church v. Cooper, 20 N. E.
Rep. 352, decided by the New York Court of
Appeals. There it was held that where de-
fendant's intestate signed a subscription
paper by which the signers agreed to pay to
the trustees of plaintiff church the amounts
set opposite their names, on condition that a
certain fixed sum was subscribed, the fact



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that other persons signed such subscription
on the faith of the signature of the decedent
constituted no consideration for the promise
of the latter. The court says :

It bu sometimes been supposed tbat wben several
persons promise to contribute to a common object
desired by all, the promise of each may be a good con-
sideration for the promise of others, and this although
the object in view U one In which the promisors have
no pecuniary or legal Interest, and the performance of
the promise would not in a legal sense be beneficial to
the promisors entering into the engagement. This
seems to have been the view of the chancellor, as ex-
pressed in the Hamilton College Case, when it was
before the court of errors (2 Denlo, 417) ; and dicta
of the Judges will be found to the f>ame effect in other
cases. Trustees* V. Stetson, 5 Pick. 608; Watkins v.
Bames, 9 Cu8h.627. But the doctrine of the chan-
cellor, as we understand, was repudiated when the
Hamilton College Case came before this court (1 N. T.
661), as have been also the dicta In the Massachusetts
cases, by the court in that State, in the recent case of
Church v. Kendall, 121 Mass. 528. The doctrine seems
to us unsound In principle. It proceeds on the as-
sumption that a stranger both to the consideration and
the promise, and whose only relation to the transaction
is that of donee of an executory gift, may sue to en-
force the payment of the gratuity for the reason that
there has been a breach of contract l>etween the several
promisors, and a failure to carry out, as between
themselves, their mutual engagement. It is in no
proper sense a case of mutual promises as between
the plaintiff and defendant. If any action would lie at
all, it would l>e one between the promisors for breach
of contract. • • • Such consideration must there-
fore be found other than that expressly stated in the
subcription paper in order to sustain the action. It is
urged that a consideration may be found In the efforts
of the trustees of the plaintiff during the year, and the
time and labor expended by them during that time, to
secure subscriptions in orider to fulfill the condition
upon which the liability of the subscribers depended.
There is no doubt that labor and services rendered by
one party at the request of another would constitute a
good consideration for a promise made by the latter to
the former, based on the rendition of the service.
But the plaintiff encounters the difilculty that there is
no evidence, express or implied, on the face of the
subscription paper, nor any evidence outside of it, that
the corporation or the trustees did, or undertook to
do, anything upon the Invitation or request of the sub-
scribers. Nor is there any evidence that the trustees
of the plaintiff, as representatives of the corporation,
in fact did anything in their corporate capacity, or
otherwise than as individuals interested in promoting
the general object in view. Leaving out of the sub-
scription paper the afilrmative statement of the con-
sideration (which for reasons stated may be rejected),
it stands as a raked promise of the subscril>ers to pay
the several amounts subscribed by them for the pur-
pose of paying the mortgage on the church property,
upon a condition precedent limiting their liability.
Neither the church nor the trustees promise to do
anything, nor are they requested to do anything, nor
can such a request be implied. It was held in the
Hamilton College Case, 1 N. T. 581, that no such re-
quest could be implied from the terms of the sub-
scription in that case, in which the ground for such an
implication was, to say the least, as strong as in this
case. • • • Thecasesof Bames V. Ferine, 12 N.T.



18, and Robarto v. Cobb, 108 N. T. 600, eited and dis-
tinguished.



Probably the most important case to banks
and bankers, involving the question of appli-
cation of deposits, that has lately appeared,
is Grissom v. Commercial Nat. Bank, 10 S.
W. Eep. 774, decided by the Supreme Court
of Tennessee. There the defendant bank
contended for the right, without further
orders to apply certain moneys on deposit
to plaintiff's credit, to the payment of
plaintiff's note made payable there, taking
the position that it has the power to treat a
note so made as the equivalent of a check,
and as a direction, therefore, on the part of
the maker to pay same on his general account
as a depositor. The court enter into a long
and exhaustive review of the authorities, and
conclude that the bank has no such authority
in the absence of a usage or of instructions.
They say :

The question is presented for the first time in this
State, although it has received the attention of text
writers, and been passed upon by the courts of other
States, where we find a confiict of opinion. Under
such circumstances it Is our duty to determine the
question for ourselves, upon reason and principle, and
with a due regard for considerations of public po1i<gr
and convenience, provided that, In doing so, we do nol
place our State in antagonism to the current of authority
in this country. We recognize the fact that it is of
prime importance that the several States in this Uolon
should, as far as may be, without doing violence to
well settled principles of State Jurisprudence, en-
deavor to bring about and maintain as much certainty
and uniformity of decision on questions of commercial
law as can be accomplished. In response to this idea,
we would, upon the question now before us, yield
much of the strong conviction we entertain thereon in
the endeavor to place ourselves inline with the current
of authority, if a strong and steady current could be
found, which would not threaten to engulf and destroy
distinctions which have been long and well settled in
this State. While we must concede that the weight of
text- book authority is in support of defendant's oon«
tention, we are unable to discover that the weight of
Judicial decision is in the same direction. Moreover,
we are constrained to believe that the contrary view is
more in harmony with well settled adjudications in this
State upon principles presenting analogous questions,
and that the current of adjudged cases is certainly u
strong in the same direction. Let us see. In the first
place, what is the relation between depositor and
banker. It is merely that of debtor and creditor,
where the deposit is not a special one. The money
deposited in the ordinary course of business is at once
blended with the general funds of, and becomes the
property of, the bank. The depositor has only a debt
against the bank, payable on demand, upon the pre-
sentation and surrender of the draft or order addressed
to and directing the bank in unequivocal terms to pay
the amount of such draft to the person therein named*
or to bearer. This order is commonly known in oom*
merclal and banking parlance as a "check." • • •



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• • Is the liability of Indoners and sureties to de-
pend upon the pleasure of the bank whether or not it
will appropriate the deposits of the malEer to the pay-
ment of his notes? If the banks should pay checks
drawn on the day of the maturity of a note of the
maker in favor of itself or of a third party, to the ex-
haustion of the drawer's deposits, is it to l>e liable to
the bolder of the note for not having withheld sufficient
funds to pay the latter? And is a twin suit to be born
out of the same transaction between the holder and
the sureties or indorsers as to whether or not they
have been thereby discbanced; they, perhaps, having
given notice to the bank that unless deposits sufficient
are held they will claim their discbarge? If the bank
should, under such notice, deem it safe to withhold
deposits sufficient for the note, in it to then encounter
a suit with the holder of a check unpaid? Is the
maker of a note, where there has been a total failure
of consideration, giving him a good defense to the
note as against the payee or purchaser, not in due
course of trade, to be held liable to the bank, which,
In the absence of deposits, has gone forward and paid
the note for the maker, advancing the money therefor
under the proposition, authorizing the bank to
treat the note made payable months before at its bouse
as equivalent to a check, or request to pay? On the
other hand, if the bank should fail to pay a note so
made payable where there were deposits sufficient,
whereby the note is protested, is the bank to become a
defendant to a suit for damages for injury to the credit
and business of the maker, upon the authority of the
proposition, to the effect that the note so made
constituted the bank the maker's agent to protect his
credit out of the latter's deposits? Illustrations of
the inconvenience and hardships of the rule which we
are urged to establish could be multiplied almost in-
definitely, and are such as to readily suggest them-
selves to thoughtful men, acquainted with the practical
affairs of commercial life. To hold a note payable at a
particular bank as tantamount to a check on the bank,
is to confound distinctions heretofore established and
well settled in the adjudications of this State between
notes and checks. A **check'' is defined to be a *' writ-
ten order on a bank directing it to pay a certain sum
of money.'* A '*note" is the '^written promi8e to pay
another a certain sum of money at a certain time."
One is payable on presentation, the other is payable
on a day certain. One is entitled to days of grace, the
other is not. One is an order on a third party, the
other is the undertaking of the party himself. One is



Online LibraryAugustus John Cuthbert HareThe Central law journal, Volume 28 → online text (page 106 of 151)