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Central Law Journal.

ST. LOUIS, MO., APRIL 3, 1896.

The attitude of the Supreme Court of the United States on the question presented by the recent case of Lehigh Min. & Mfg. Co. v. Kelly is of more than ordinary interest to those who have followed the decisions of the federal courts on the subject of "tramp" corporations in those courts. It appeared, in that case, that the individual stockholders and officers of a Virginia corporation organized another corporation under the laws of Pennsylvania, for the express purpose-according to a stipulated state of facts-of bringing a suit in a federal court to recover possession of certain lands in Virginia, which had been claimed by the Virginia corporation against citizens of Virginia. Such claim was assigned and transferred, without payment of a valuable consideration, from the Virginia corporation to the Pennsylvania corporation before the bringing of the suit. It was held that the attempted transfer of the claim constituted in law a fraud upon the federal court, and a wrong to the defendants, and that the federal court below had properly declined to assume jurisdiction of the

case.

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tended very forcibly that "it is not decisive of the present inquiry that, under the adjudications of this court, the stockholders of the Pennsylvania corporation-the question being one of jurisdiction-must be conclusively presumed to be citizens of that commonwealth. Nor is it material, if such be the fact, that the Pennsylvania corporation could not have been legally organized, under the laws of that commonwealth, in February, 1893, unless some of the subscribers to its charter were then citizens of Pennsylvania. We cannot ignore the peculiar circumstances which distinguish the present case from all others that have been before this court. stockholders who organized the Pennsylvania corporation were, it is agreed, the same individuals, who at the time were the stockholders of the Virginia corporation. And under the rule of decision adverted to, the stockholders of the Virginia corporation, just before they organized the Pennsylvania corporation, as well as when the Virginia corporation conveyed the legal title, were, presumably, citizens of Virginia. If the rule which has been invoked be regarded as controlling in the present case, the result, curiously enough, will be that immediately prior to February, 1893, before the Pennsylvania corporation was organized, the stockholders of the Virginia corporation were, presumably, citizens of Virginia; that, a few days thereafter, in February, 1893, when they organized the Pennsylvania corporation, the same stockholders became, presumably, citizens of Pennsylvania; and that, on the 1st day of March, 1893, at the time the Virginia cor

poration, the same persons were, presumably, citizens at the same moment of time, of both Virginia and Pennsylvania."

Though the opinion is supported by abundant federal authority and its result practically just, three of the members of the supreme court dissented, principally upon the ground of the inability of the court to go behind or inquire into the Pennsylvania incorporation,poration conveyed to the Pennsylvania corin view of the legal presumption that "where a corporation is created by the laws of a State * * its members are citizens of the State which created the corporate body; that a suit by or against a corporation, in its corporate name, must be presumed to be a suit by or against the citizens of the State which created the corporate body; and that no averment or evidence to the contrary is admissible for the purpose of withdrawing the suit from the jurisdiction of a court of the United States." Railroad Company v. Wheeler, 1 Black, 296.

On the other hand Mr. Justice Harlan, who wrote the opinion of the majority, conVol. 42-No. 14.

An Eastern law exchange commenting upon this decision says that "the fact that three justices took the view that the incorporation in another State of citizens of Virginia was not open to an attack even in such an extreme case shows that the tendency to recognize so-called 'tramp' corporations is generally prevailing. The Courts of New York (Delmarest v. Flack, 128 N. Y. 205), and and Rhode Island (Oakdale Mfg. Co. v. Garst, 28 Atl. Rep. 973), treat as legitimate suitors, with the ordinary rights of aggression

and defense, foreign corporations, organized by their own citizens and doing business within their own territories respectively, although the facts make it very apparent that such outside incorporation was sought for the purpose of taking advantage of what were considered more lenient or available statutes than those in force at home. It seems to us that, in general, this is the only practicable view, and it by no means follows from this recent decision of the Supreme Court of the United States in Lehigh Min. & Mfg. Co. v. Kelly, that that tribunal would not feel bound to accept the fact of incorporation under a State law as a legal finality, in a case where it did not affirmatively appear that to entertain the presumption of citizenship of stockholders in the State of incorporation would lead to palpable absurdity." In a recent issue of this JOURNAL (42 Cent. L. J. p. 215) will be found a valuable paper on this subject written by Judge Seymour D. Thompson.

NOTES OF RECENT DECISIONS.

INFRINGEMENT OF PATENT USE BY GOVERNMENT-SUIT AGAINST OFFICERS INJUNCTION. It is held by the Supreme Court of the United States in Belknap v. Schild, 16 S. C. Rep. 443, that persons using a patented article without any license are not exempt from liability for the infringement because they did so only as officers of and for the benefit of the United States; that an injunction cannot issue to restrain employees of the United States from using an article made by the United States in infringement of a patent, and which is owned by and in the possession of the government, the United States being an indispensable party, and that in a suit for infringement of a patent against the United States officers, who used the patented article only for the benefit of the United States, a decree cannot be rendered against such officers for the gains and profits which accrued to the government from the use of such article. Mr. Justice Gray delivered an exhaustive and learned opinion. Mr. Justice Harlan dissented from the conclusion of the court as to the two last propositions above stated.

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CONTRACTS

MUNICIPAL CORPORATION STATUTORY RESTRICTION. The Supreme Court of Indiana decide, in City of Indianapolis v. Wann, 42 N. E. Rep. 901, that under the act governing cities of 100,000 inhabitants, providing that no executive department or officer shall have power to bind such city by any contract, to any extent, beyond the amount of money at the time already appropriated by ordinance for the purpose of such department, and all contracts of any sort, beyond such existing appropriations, are declared to be absolutely void, a contract for the lighting of the city for five years, let by the board of public works at a time when the appropriation for that purpose was available only for the current month and the one following is void and cannot be ratified by a subsequent appropriation.

Such statutory regulations for city governments are not new. Statutory restrictions, very much like those before the Indiana court have been enacted in the States of Minnesota, Illinois, Pennsylvania, California, Ohio, Michigan, and Oregon, and such statutes have received by the courts of those States the same construction placed upon the statute here involved. Kiichli v. Electric Co. (Minn.), 59 N. W. Rep. 1088; Garrison v. Chicago, 7 Biss. 480, Fed. Cas. No. 5,255; City of Superior v. Norton, 12 C. C. A. 469, 63 Fed. Rep. 357; Bladen v. Philadelphia, 60 Pa. St. 364; City of Philadelphia v. Flanigen, 47 Pa. St. 21; Jonas v. City of Cincinnati, 18 Ohio, 318; Wallace v. Mayor, etc., 29 Cal. 181; Gas Co. v. Brickwedel, 62 Cal. 641; Niles Waterworks v. City of Niles, 59 Mich. 311, 26 N. W. Rep. 525; Coulson v. City of Portland, Deady, 481, Fed. Cas. No. 2,275; Pullman v. Mayor, etc., 43 Barb. 57.

WRONGFUL ACT OF SERVANT-LIABILITY OF MASTER.-In Richberger v. American Exp. Co., 18 South. Rep. 922, decided by the Supreme Court of Mississippi, it appeared that defendant express company's agent overcharged plaintiff for some matter of express; that plaintiff complained to defendant's gen. eral agent, and requested the local agent to refund; that later plaintiff was in defendant's office on other business, and the agent informed him that he wished to repay the overcharge; that he required plaintiff to sign a

receipt for the money; that "immediately," while plaintiff was then in the office of defendant, the agent willfully and wrongfully cursed and maltreated plaintiff "because plaintiff had demanded and received" the overcharge. It was held, that the acts and declarations of the agent were a part of the res gestæ, and therefore the company was liable for the injuries inflicted. The following is from the opinion of the court:

The old doctrine of M'Manus v. Crickett, 1 East, 106, that the master is never liable for the willful or malicious act of his servant (like the early doctrine that a corporation was never so liable, which latter doctrine arose out of the early misconception of the nature of a corporation. See 5 Thomp. Corp. §§ 6275, 6277, 6280, 6298), has long since been repudiated. Cowen, J., put the whole argument for the opposite view in a single sentence when he said, in Wright v. Wilcox, 19 Wend. 343, that "the dividing line was the willfulness of the act." But the whole argument against liability, on such reasoning, is definitely and conclusively answered in Thompson on Corporations, where the whole question is exhaustively treated. Says this author, in section 6298: "The courts which have so ruled have proceeded on the theory that authority from the master to the servant to commit a willful wrong will not be implied, and that the servant when so acting will therein be deemed to act, not for his master, but for himself. If he makes use of his master's property in committing this wrong, he will be deemed, according to the fantastic reasoning of Lord Kenyon, in M'Manus v. Crickett, borrowed from Rolle's Abridgment, to have acquired, for the time being, a special property therein. The fallacy of this reasoning was that it made a certain mental condition of the servant the test by which to determine whether he was acting about his master's business or not. Moreover, with respect of all individual acts done by a servant in the supposed furtherance of his master's business, it clothed the master with immunity if the act was right, because it was right; and if it was wrong, it clothed him with a like immunity because it was wrong. He thus got the benefit of all his serv ant's acts done for him, whether right or wrong, and escaped the burden of all intentional acts done for him which were wrong. Under the operation of such a rule, it would always be more safe and profitable for a man to conduct his business vicariously than in his own person. He would escape liability for the consequences of wrong acts connected with his business springing from the imperfection of human nature, because done by another, for which he would be responsible if done by himself. Meanwhile the public, obliged to deal or come in contact with his agents, for intentional injuries done by them might be left wholly without redress. A doctrine so fruitful of mischief could not long stand unshaken in an enlightened system of jurisprudence." And he states that it is repudiated by eminent text-writers, and the great weight of modern authority, citing quite fully the authorities to date. He then clearly shows the true test to be, not whether the act was committed in pursuance of orders from the master or against orders, whether the master ratified or not, whether the tort was willful and malicious or not, but whether, and solely whether, the act constituting the tort was done in the master's business. As well said in Rail

road Co. v. Young, 21 Ohio St. 518: "If the nature of the injurious act is such as to make the master liable for its consequences, in the absence of the particular intention, it is not perceived how the presence of such intention can be held to excuse the master." Sections 6299-6316, inclusive. He also clearly points out that the rule is not one of logic, but of public policy and necessity,-a view concurred in by Judge Andrews in Higgins v. Turnpike Co., 46 N. Y., at page 27, the reasoning in which case, and in Rounds v. Railroad Co., 64 N. Y. 129, is unanswerable. To the same effect, see Palmeri v. Railroad Co. (N. Y. App.) 30 N. E. Rep. 1001; Cooley, Torts, p. 626 (1); Mechem, Ag. §§ 740, 741; and the authorities cited by these writers. Judge Thompson is not alone in bis criticism of M'Manus v. Crickett, supra. Chief Justice Ryan, in Craker v. Railroad Co., 36 Wis. 657, points out the fact that M'Manus v. Crickett rested on Middleton v. .Fowler, 1 Salk. 282, the only case cited in its support, and that that case was not a case of malice, but of negligence; and said, with great pertinence and power, that "one employing another in good faith, to do his lawful work, would be as little likely to authorize negligence as malice," and that "either would be equally dehors the employment." See, also, Express Co. v. Patterson, 73 Ind. 480; Express Co. v. Fitzner, 59 Miss. 581; Williams v. Insurance Co., 57 Miss. 759. It thus appears that M'Manus v. Crickett is not now law. Counsel for appellee relies upon and cites this case and the cases of McCoy v. McKowen, 26 Miss. 487, and Railroad Co. v. Harrison, 48 Miss. 112. It is true that both these cases are based on M'Manus v. Crickett. It is also true that both expressly declare that "it is immaterial whether or not the tortious act be committed while the agent is engaged in the rightful business of his employer, which he is attending to by his direction; for if he transcends his authority while so engaged, his acts do not bind his employer unless sanctioned by him," thus declaring immaterial that which is the very test of liability in this class of cases. So far as this declaration is concerned, these cases are hereby overruled expressly, that they may not further mislead. They have been practically overruled by repeated subsequent decis ions of this court. Williams v. Insurance Co., 57 Miss. 759. As to Railroad Co. v. Harrison, supra, it is correctly said by Judge Thompson (section 6300, bottom of page 4929), that "the true reason of the decision was not that the act was willful or malicious, but that it was plainly outside the line of duty of the servant." But it is urged that, however applicable this doctrine may be to carriers of passengers, it is not applicable to an express company. Doubtless, there is a difference in the extent of the application of the principle, as between carriers of passengers and express companies, measured exactly by the difference in the things done by them in the discharge of their duties, respectively. But the principle applies to both. An express company does not transport passengers, and cannot be made liable, as a carrier of passengers might, for willful torts committed by its agent on passengers in their transportation; but it keeps offices for the transaction of its proper business, a business calling to its offices every day thousands of citizens, and in its dealing with its customers in its offices, in its business, it is bound, in Judge Story's language, "for respectful treatment and for decency of demeanor." It is impossible to say, on the allegations of this declaration, that the tort committed immediately upon the delivery of the receipt to the agent, and because of the demand for the refunding of what was plaintiff's conceded due, was so separated

in time or logical sequence as not to have been an act done in the master's business. The whole transac tion occurred in the shortest time, and was one continuous and unbroken occurrence. The cursing and abusing and maltreatment were all administered in connection with the taking of the receipt, and im mediately upon its delivery, and because of the demand for his rights in that matter, and while plaintiff was in appellee's office to transact, and transacting, this very business. What was said and done thus immediately upon the delivery of the receipt was part of the res gesta. As well said by Judge Thompson, in his Commentaries on Corporations (section 6299, top of page 4928): "In this view, even under the modern doctrine, the acts or declarations of the sery. ant or agent tending to show his state of mind at the time of the act complained of would be admissible in evidence as part of the res gesta." We have heretofore quoted from the masterly opinion of Judge Andrews in Rounds v. Railroad Co., 64 N. Y. at page 136; in Latham v. Railroad Co. (Miss.), 16 South. Rep. 757, to show when in this character of case the corporation would not be liable. Complementary to that, we close this opinion with the words of the same great judge, in the same case, at page 134, 64 N. Y., to show here a case of liability: "The master who puts a servant in a place of trust or responsibility, or commits to him the management of his business or care of his property, is justly held responsible when the servant, through lack of judgment or discretion, or from infirmity of temper, or under the influence of passion aroused by the circumstances and the occasion, goes beyond the strict line of his duty and authority and inflicts an unjustifiable injury upon another." Reversed, demurrer overruled, and cause remanded.

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AFTER JUDGMENT.-The Supreme Court of California decides in Kaufman v. Shain, 43 Pac. Rep. 393, that it is within the discretion of the trial court on satisfactory evidence, outside the record that the record minutes incorrectly set forth its orders, to direct an amendment thereof at any time after judgment, and that where judgment is entered in conformity to record minutes incorrect by directing it, on amendment of the minutes to conform to the actual order of the court, the judgment must be set aside. The court says in part:

Every court of record has the inherent right and power to cause its acts and proceedings to be cor rectly set forth in its records. The clerk is but an instrument and assistant of the court, whose duty it is to make a correct memorial of its orders and directions; and whenever it is properly brought to the knowledge of the court that the record made by the clerk does not correctly show the order or direction which was in fact made by the court at the time it was given, the authority of the court to cause its records to be corrected in accordance with the facts is undoubted. In re Wight, 134 U. S. 136, 10 Sup. Ct. Rep. 487; Balch v. Shaw, 7 Cush. 252; Fay v. Wenzell, 8 Cush. 315; Frink v. Frink, 43 N. H. 508; Crim v. Kessing, 89 Cal. 486, 26 Pac. Rep. 1074. In the exercise of this power the court is not, however, authorized to do more than to make its records correspond

to the actual facts, and cannot, under the form of an amendment of its records, correct a judicial error, or make of record an order or judgment that was never in fact given. Egan v. Egan, 90 Cal. 15, 27 Pac. Rep. 22. The power to change its judgment, as well as the time within which such change may be made, depend upon different principles; and it was held in this State, until a different rule was prescribed by statute, that this power could not be exercised after the adjournment of the term in which the judgment had been entered. Baldwin v. Kramer, 2 Cal. 582; Morrison v. Dapman, 3 Cal. 255; Carpentier v. Hart, 5 Cal. 406; Lattimer v. Ryan, 20 Caг. 628; Wilson v. McEvoy, 25 Cal. 169; Casement v. Ringgold, 28 Cal. 335. The history and development of the procedure in this State upon this subject is set forth in Brackett v. Banegas, 99 Cal. 623, 34 Pac. Rep. 344. In Branger v. Chevalier, 9 Cal. 172, the same rule was applied to an order revoking the settlement of a statement, on the ground that, by being filed, the statement had become a part of the record. In De Castro v. Richardson, 25 Cal. 49, the rule was applied to an order amending a previous order granting time within which to prepare a statement on motion for a new trial. But in Spanagel v. Dellinger, 34 Cal. 476, the court held that it had erred in making such application; that, notwithstanding the adjourn ment of the term after judgment had been entered, the court had jurisdiction to correct or amend orders made in proceedings for a new trial, for the reason that such orders did not form a part of the "record," which had become final by the adjournment. And in Wilson v. Cleaveland, 30 Cal. 192, it was held that the adjournment for the term did not affect the jurisdiction of the court over its orders made during that term, unless final judgment in the case had been entered. The same question was argued by counsel in Hegeler v. Henckell, 27 Cal. 491, but, as it did not appear from the record that any order amending the minutes had been made, the point was not passed upon by the court.

Whether the clerk has correctly recorded an order made by the court, or whether an amendment of the entry shall be made, so that the minutes shall correctly express what was done or directed, is to be determined by the court in which the motion is made; and the evidence that may be offered in support of the motion must be satisfactory to the judge of that court. The motion to correct a minute entry is emi. nently addressed to the court in which the entry is made, and its determination upon any conflict of evidence concerning the order that it had made is not open to review. "The amount and kind of evidence requisite to satisfy that court as to what was the real order of the court, and what was the proper entry on the docket or extended record, must rest with that court." Fay v. Wenzell, supra. In acting upon the motion, the judge is in the exercise of one of the func tions of his judicial office, and will not direct the amendment unless the evidence is such as will clearly satisfy him that the entry does not correctly express the order which was made. If the motion is made upon the day succeeding the entry, his own memory of what he had directed might be sufficient; whereas, if there had been a great lapse of time between the making of the entry and the motion for its amendment, he would naturally require more explicit evidence that the entry was incorrect. See Porter v. Vaughan, 22 Vt. 269.

The court is not precluded from correcting the entry merely because the "record" does not show that it is itself incorrect. The rule at common law, that

the record can be amended only when there is something in the record to amend by, was applied when it was sought to amend a judgment at a term of the court subsequent to that in which it had been signed and enrolled; but it has no application to the amendment of matters that do not form a part of the judg. ment roll or "record." Until the entry of the judgment the record was in the breast of the court. Afterwards, it was in the roll. It was only the "record" thus made up which imported[absolute verity. "The making up of the judgment roll is the equivalent, under our practice, of the entry of record at common law." De Castro v. Richardson, 25 Cal. 49. So long as the matters remained "in paper,"—that is, before the record had been enrolled on parchment-it was not a matter of record, but was subject to amendment upon mere suggestion. 1 Tidd. Prac. 697, 711. Mere entries in the minutes of the court are not, properly speaking, matters of record. Weed v. Week, 25 Conn. 344. They become so only by being incorporated into bills of exception, and thus made a part of the judgment roll. In Spanagel v. Dellinger, supra, the original entry in the minutes of the court gave the appellant time within which to prepare a "statement on appeal," and after the adjournment of the term the courtdirected an amendment of the entry by causing it to read "a statement on motion for new trial." There was no record or minute entry that such an order had been made, and the amendment was allowed upon a showing by the affidavit of the attorney that such was the order that had been made. In Crim v. Kessing, 89 Cal. 478, 26 Pac. Rep. 1074, an order, of which there was no entry in the minutes, was made and entered nunc pro tunc upon "proofs to the satisfaction of the court." In Rousset v. Boyle, 45 Cal. 64, after the judgment had been affirmed by the supreme court, it was amended in matter of subtance, upon a showing, by matters outside of the rec. ord, that it did not conform to the judgment which had been in fact rendered. In Weed v. Weed, supra, it is said: "It is often the case that the court announces in open court the decision which it has made, without furnishing the clerk with any writing upon the subject. Were the latter to make a mistake in entering up the judgment, the injured party would be remediless, unless the mistake could be corrected upon the testimony of the judge who made the decision, and the counsel and others who were present and heard it announced." In Frink v. Frink, supra, the court said: "We think it clear, upon the author. ities, that the court may make such amendments upon any competent, legal evidence, and that they are the proper judges as to the amount and kind of evidence requisite in each case to satisfy them what was the real order of the court, or actual proceeding before it -what was the proper entry to be made upon the docket, and how the record should be extended." See, also, Gillett v. Booth, 95 Ill. 183; Bank v. Seymour, 14 Johns. 219; Hunt v. Wallis, 6 Paige, 375. This power of a court to amend its records so that they may correspond with the fact, and correctly express what was done by the court, may be exercised at any time. Crim v. Kessing, 89 Cal. 486, 26 Pac. Rep. 1074; Egan v. Egan, 90 Cal. 21, 27 Pac. Rep. 22; Frink v. Frink, 43 N. H. 508; Balch v. Shaw, 7 Cush. 282; Fay v. Wenzell, 8 Cush. 315; Hart v. Reynolds, Cow. 42, note. "No lapse of time will divest the court of its power, or absolve it from its duty, to supply deficiencies in the records of its own proceedings, where justice and the truth of the case require it." Lewis v. Ross, 37 Me. 230. In Cradock v. Radford, 4 Mod. 371, the court ordered the roll to be brought in

and amended 20 years after the judgment had been signed. In Frink v. Frink, supra, the amendment was allowed after a lapse of 12 years, and in Balch v. Shaw, a still longer time had intervened between the entry and the amendment. In Crim v. Kessing, supra, the court, in January, ordered a nunc pro tunc order to be made as of the previous March, prior to the trial of the cause. In Roussett v. Boyle, supra, the court permitted the amendment several years after the entry of the judgment, and after it had been affirmed in the supreme court.

THE RIGHT OF STOPPAGE IN TRANSITU.

Where a creditor sells goods to another who, after the sale, but before actual receipt of the property, becomes insolvent, the law gives the right of stoppage in transitu. This is given the creditor for his protection both from the uncertainties of collecting his claim from the insolvent debtor, and to the end that the property thus sold may not be resorted to by other creditors of the same debtor in their zeal to realize their claims. The law supposes that the creditor whose goods are in transit to the vendee has a better right to the same before there is an actual delivery to the debtor than has either an insolvent vendee or his other creditors, however diligent they may be. the vendor in extending credit to the vendee and delivering the goods to the carrier to be transported to him in pursuance of the credit so extended, does so on the implied assurance on the part of the vendee that he will keep his credit good. And when the vendee fails to so preserve his good credit, the vendor is no longer under any obligations in either law or morals to continue the credit, but may seize the goods so sold by virtue of his right to stop them upon the discovery of the insolvency of the consignee and subject them to his vendor's equitable lien in order to protect himself from his vendee's insolvency.1 Where an agent is authorized to act for the seller, either in a general way, or specially as to the consignment, he will likewise have authority to assert the right of stoppage in behalf of his principal. And this is true though he may have no actual express authority to stop the particular goods or merchandise.2 Nor is it necessary in order to properly as

Another theory of the right is that

1 Thompson v. B. & O. R. R. Co., 28 Md. 396.

2 Reynolds v. Boston & Maine R. R., 43 N. H. 580; Chandler v. Fulton, 10 Tex. 2.

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