known either to the bank or to the surviving partner, his assignment of the firm property for the benefit of its creditors is not void because it gives a preference to the bank for the money borrowed from it and used in paying the firm debts. Haight, J., says:

The precise question involved in this case does not appear to have been passed upon in any reported case, so far as we have been able to discover, except in Haynes v. Brooks, 8 Civil Proc. R. 106-113, where an assignment was made for the benefit of creditors by a surviving partner. In that case, as in this, the creditors had loaned money to the surviving partner to pay a note of the firm. Van Vorst, J., in commenting upon the transaction, said: "If a firm obligation was retired by the use of the money loaned or advanced by Brown & Co. the surviving partner would have been entitled to be repaid out of the firm property. As the moneys of Brown & Co. in fact paid a firm obligation, I see no objection in the subrogation of them in equity to the rights of the surviving partner or to the regarding of them as entitled to be repaid out of the firm assets. That works injustice to no one." The learned judge concluded by ordering the complaint dismissed, thereby sustaining the validity of the assignment. This case was affirmed in the general term (42 Hun, 528), and in this court in 116 N. Y. 487, 22 N. E. Rep. 1083. This question, however, was not considered in either of the appellate courts. In Re Estate of Davis, 5 Whart. 529, it was held that after the dissolution of a copartnership the partner authorized to settle the estate may borrow money on the credit of the firm for the purpose of paying itsdebts, and if the credit be given in good faith, though with a knowledge of the dissolution, and the money borrowed be faithfully applied in liquidation of the debts of the partnership,the creditor has a claim against the firm assets, and is not to be considered as a creditor merely of the partner borrowing. In the case of Prudhomme v. Henry, 4 La. Ann. 700, it was held that, where a liquidating partner after the dissolution has borrowed money to pay the debts of the firm, the partnership is liable so far as the evidence shows that the money was used for the benefit of the firm. In the last two cases the partnerships were not insolvent, and the question arose as between the partners. The courts, however, recognized the claim of the lender as one which ought to be paid by the partnership. In the case under consideration it is true that the partnership is insolvent, and the question arises as between the bank and creditors of the partnership but the creditors have not been harmed or prejudiced by the action of the bank in loaning the money to the survivor, for the assets were increased in value to the amount of the loan, and the money drawn out of the bank was applied in extinguishment of the claims of the creditors, thus reducing to that extent the liabilities of the firm. When a partnership is dissolved by the death of a partner the survivor is entitled to the possession and control of the joint property for the purpose of closing its business, and to that end and for that purpose he may, according to the settled principles of the law of partnership, administer the affairs of the firm, and by sale, mortgage, or other reasonable disposition of the property make provision for meeting its obligations. He may, for that purpose, borrow money, and give a valid pledge of the copartnership property for its repayment. Williams v. Whedon, 109 N. Y. 333, 16 N. E. Rep. 365; Emerson v. Senter, 118 U. S. 3-8, 6 Sup. Ct. Rep. 981; Fitzpatrick v. Flannagan, 106 U. S.

648, 1 Sup. Ct. Rep. 363; Butchart v. Dresser, 4 De Gex, M. & G. 542, 10 Hare, 453; Banking Co. v. Cure, 31 Ch. Div. 326. In Case v. Beauregard, 99 U. S. 119; 124, Mr. Justice Strong, in commenting upon the rights of partners in suit involving the marshaling of the assets, says: "The right of each partner extends only to the share of what may remain after payment of the debts of the firm and a settlement of its accounts. Growing out of this right, or rather included in it, is the right to have the partnership property applied to the payment of the partnership debts in preference to those of any individual partner. This is an equity that partners have as between themselves, and in certain circumstances it inures to the benefit of the creditors of the firm. The latter are said to have the privilege or preference, sometimes loosely denominated a 'lien,' to have the debts due to them paid out of the assets of a firm in course of liquidation to the exclusion of the creditors of its several members. This equity is a derivative one. It is not held or enforceable in their own right. It is practically a subrogation to the equity of the individual partner, to be made effective only through him. Hence, if he is not in a condition to enforce it, the creditors of the firm cannot be. Rice v. Barnard, 20 Vt. 479; Appeal of York Co. Bank, 32 Pa. St. 446. But so long as the equity of the partner remains in him, so long as he retains an interest in the firm assets as a partner, a court of equity will allow the creditors of the firm to avail themselves of his equity, and enforce through it the application of those assets primarily to the payment of the debts due them whenever the property comes under its administration." In the case of Saunders v. Reilly, 105 N. Y. 12, 12 N. E. Rep. 170, it was held that a mere general creditor of a firm, having no execution or attachment, has no lien whatever upon its personal assets. That, while firm creditors are entitled to a preference over creditors of the individual members of the firm in the payment of their debts out of the assets in the course of liquidation, their equity is not held or enforceable in their own right, but is a derivative one, practically a subrogation of the equity of each individual partner to have the firm assets applied primarily to the payment of its debts; and where no such equity exist in favor of any member of the firm the firm creditors have none; and, therefore, where a judgment is recovered against all the members of a firm upon a joint obligation, but not an indebtedness of the firm, the firm property may be levied upon and sold on execution issued on the judgment. See, also, Dimon v. Hazard, 33 N. Y. 64; Stanton v. Westover, 101 N. Y. 265, 4 N. E. Rep. 529; Kirby v. Schoonmaker, 3 Barb. Ch. 46: Brown v. Higginbotham, 27 Amer. Dec. 618; Peyton v. Stratton, 7 Gratt. 380: Stebbins v. Willard, 53 Vt. 665. It appears to us that the conclusion is warranted from the authorities referred to that where a person in good faith loans money to a surviving partner, and where the money is faithfully applied by such partner in satisfaction of the liabilities of the firm, the claim, becomes one which in equity should be paid out of the assets of the firm; and in an accounting between the survivor with the personal representatives of the deceased partner equity will recognize the right of the surviving partner to have the money borrowed and applied by him repaid out of the assets of the firm, and an assignment so directing is not fraudulent.

1038, the Supreme Court of Texas holds that where articles of incorporation, alleging that two of the corporators are residents of the State, are regularly filed in the office of the secretary of State, as required by law, and a certificate issued by the secretary, and it afterwards appears that there were not two citizens of the State among the incorporators, as required by law, the corporation is de facto, and subsequent stockholders cannot be held liable as partners for its debts to persons dealing with it as a corporation. Gaines, J.,

says:

The pretended charter in this case alleges that two of the subscribers are residents of the State of Texas, but does not allege that either of them is a citizen. Such being the facts, we think there can be no question that we have a case of a corporation de facto; that is to say, not a corporation legally constituted, but a corporation organized and operated under color of law. In addition to this, there was evidence which authorized, if it did not compel, the court to conclude, as a matter of fact, that the defendants Heidenheimer, Marx, and Kempner, became stockholders in the alleged corporation without any notice of the vice in its charter. The question, then, we have is, can they be held liable as partners, solely upon the ground that the corporation was not legally organized? Upon the question there is an apparent conflict in the decisions of the courts, but, in our opinion, the weight of authority is in favor of the proposition that they cannot be held liable. Persons who combine their capital for the prosecuting a business venture are liable as partners for the debts of the concern, unless they be protected from such liability by an incorporation under the law. Hence, there is force in the argument that, in order to shield themselves from responsibility, they must show that the association has been legally incorporated. But, on the other hand, where there is a law which authorizes the creation of a corporation for a particular purpose; where the charter is required to be prepared and signed by the corporators, and filed with an officer of the State; and where all this has been done, and the officer has received it, and returned it, with a certificate that it has beer filed in his office, as the statute required he should do; and where the business has been carried on without action on part of the State to annul the pretended franchise, it would seem but reasonable and just that, as between the association or its stockolders and third persons dealing with it, it should be held a corporation, although there may have been some illegality or irregularity in the manner of its organization. It is well settled that persons who deal with such a corporation de facto, and who become indebted to it, are estopped from denying its existence as a legal corporation; and there is authority for holding that its creditors are also estopped from claiming against the stockholders as partners. Snider's Sons Co. v. Troy (Sup. Ct. Ala.), 8 South. Rep. 658, 32 Cent. L. J. 354, and authorities cited. Whether that rule ought to be applied in a case in which the corporators have knowingly and intentionally violated the law in procuring a charter under a general law we need not decide. But we are clearly of the opinion that it is not a proper rule to be applied in a case like the present, in which it appears that stockholders who are sought to be held liable as

partners bought their stock after the organization had been effected, and under the belief that a legal corporation existed. That under such circumstances the stockholders of the alleged corporation cannot be held liable as partners is substantially held in the following cases: Bank v. Stone, 38 Mich. 779; Fay v. Noble, 7 Cush. 188; Bank v. Padgett, 69 Ga. 164; Humphreys v. Mooney, 5 Colo. 282; Bank v. Walker, 66 N. Y. 424; Coal Co. v. Maxwell, 22 Fed. Rep. 197. See, also, Church v. Pickett, 19 N. Y. 482. In several jurisdictions it has been held that a compliance with the requirement in a general incorporation law that the charter or articles of incorporation shall be filed in the office of the secretary of State or other office is a condition precedent to the establishment of a corporation de jure; and that without such compliance the association is without color of authority, and cannot be treated as a corporation de facto. Most of the cases relied upon in support of the proposition that the shareholders in a de facto corporation are liable as partners for its debts are cases of this character. Bigelow v. Gregory, 73 Ill. 197, arose under a statute of Wisconsin which expressly prohibited the proposed corporation from doing business until the articles of association had been published in two newspaper and a certificate filed in the office of the secretary of State. These acts had not been done when the indebtedness was contracted. In Abbott v. Smelting Co., 4 Neb. 416, the defendants were held liable because they had never filed their articles of incorporation with the county clerk as the law required. The opinion seems to concede that if that act had been done there would have been a de facto corporation, and the defendants could not have been treated as partners. Ferris v. Thaw, 72 Mo. 446, and Coleman v. Coleman, 78 Ind. 344, were similar cases. Garnett v. Richardson, 35 Ark. 144, merely that holds for debts contracted before the company's articles are filed the members are liable as partners. In Ridenour v. Mayo, 40 Ohio St. 9, the defendants were authorized by law to carry on a savings bank, in which the depositors were stockholders, but carried on instead, under the corporate name, a genera] banking business, upon wholly different principles. They were held liable as partners. Not one of these decisions are inconsistent with the views we have expressed upon the law as applicable to the case before us; and, when properly considered, we hardly think that they are authority for the proposition that the shareholders in a de facto corporation are responsible for its debts. It follows that, in our opinion the appellees cannot be held liable as partners.

DOWER-ASSIGNMENT OF, IN MORTGAGED PROPERTY-REDEMPTION BY ADMINISTRATOR.-In Hewitt v. Cox, 15 S. W. Rep. 1026, the Supreme Court of Arkansas hold that under Mansf. Dig. Ark. § 186, which provides that if a person die having mortgaged any lands or pledged any personal property the court, on the application of any person interested, may order the administrator to redeem such property if it would be beneficial to the estate, and not injurious to creditors, a widow is not entitled to have lands which are assigned as dower redeemed from a mortgage which she joined her husband in executing, and that a widow takes dower in personal property subject to all liens existing at her husband's death, and she has no right to call on his administrator to redeem it therefrom.

THE DOCTRINE OF STARE DECISIS.

The rule of stare decisis is of very ancient origin; it is one of the oldest of the common law. The name "stare decisis" is taken from the maxim, "stare decisis, et non quieta movere," and the translation of the maxim is a good definition of the rule itself in all its primitive simplicity,-to stand by precedents and not to disturb what is settled.

The general rule as laid down by the authorities is as follows: Blackstone, in his Commentaries, page 69, says: "The doctrine of the law then is this: that precedents and rules must be followed, unless flatly absurd or unjust; for though their reason be not obvious at first view, yet we owe such a deference to former times as not to suppose that they acted wholly without consideration;" but he also says, "If it be found a former decision is manifestly absurd or unjust, it is declared, not that such a sentence was bad law, but that it was not law."

Kent in Vol. 1, on page 475, gives the following rule: "A solemn decision upon a point of law, arising in any given case, becomes an authority in a like case, because it is the highest evidence which we can have of the law applicable to the subject, and the judges are bound to follow that decision so long as it stands unreversed, unless it can be shown that the law was misunderstood or misapplied in that particular case." The rule as given is meant to apply to similiar cases tried in the same court-in this country there are many courts standing in various relation to each other—and in considering this rule it may be well to classify the discussion to correspond with the relations of the various courts. The rule will therefore be considered in three heads, viz: First, As between subordinate and appellate courts. Second, As between courts of co-ordinate jurisdiction. Third, As between the Federal and State courts.

First. The rule as between subordinate courts and those having appellate jurisdiction over them is well laid down in the case of the Attorney-General v. Lunn, 2 Wis. 507; the court there say: "The decisions of the highest appellate court, upon points in judgment, presented and passed upon in cases brought before it, are the law of the land until overruled, and inferior courts are bound to obey

them. On the other hand, the rule is equally well settled that the opinion of a nisi prius court, though perhaps admissible as persuasive evidence of the principle contended for, is of course, not binding as a precedent upon the appellate court, except in one instance, viz: that the supreme court will adopt the construction placed by an inferior court on its own rules of practice.2

Second. The second branch of the rule, viz: its application as between courts neither having appellate jurisdiction over the other, may itself be considered in various subdivisions.

It has been held by the Supreme Court of New York that, as between nisi prius courts of the same State, the rule of stare decisis is in some instances applicable. In the former case the language of the court is as follows: "Two or more decisions concurring on the same point, made by co-ordinate branches of the same court in different districts, should be recognized as precedents in the other districts, until reversed by a higher authority." The rule is qualified and further explained in the case of Greenbaum v. Stein, 2 Daly (N. Y.), 223, as follows: "But when there is a conflict of decisions on a given point, among the tribunals of equal rank in a State, a court in which the point has been decided upon mature deliberation should adhere to its decision until overruled by a court of last resort." The decision of the chief appellate court of a territory, before its erection into a State, or of the supreme court of a State, prior to the adoption of a new constitution, will be recognized and followed by its successor under the new system unless manifestly erroneous. The supreme court of a State, is not, as a general rule, in any measure bound by the decisions of the supreme courts of other States. The rule as laid down in the case of Caldwell v. Gale, 11 Mich. 77, is that, "Rulings made under similar systems may be cited and respected

1 Gibson v. Chouteau, 7 Mo. App. 1.

2 Mix v. Chandler, 44 Ill. 174.

3 Andrews v. Wallace, 29 Barb. 350; Bently v. Goodwin, 38 Barb. 633; The same rule is acknowledged by the federal courts, the Chelmsford, 34 Fed. Rep. 399; Reed v. Railway Co., 21 Fed. Rep. 283.

4 Emery v. Reed, 65 Cal. 351.

5 Doolittle v. Shelton, 1 Greene (Iowa), 272; Emery v. Reed, 65 Cal. 351.

6 Koontz v. Knabb, 16 Md. 549; Nelson v. Goerce, 34 Ala. 565; Jamison v. Burton, 43 Iowa, 282.

for their reasons, but are not necessarily to be accepted as guides, except in so far as those reasons commend themselves to the judicial mind." The case of Boyce v. St. Louis, 29 Barb. 650, states substantially the same rule, and it is illustrated and followed in nearly every case reported in the State reports, for probably there is no point of law on which the supreme courts of all the States agree, so that in every case decisions on both sides are cited and the court is compelled to choose which it will follow. An exception to the general rule just stated is made when a particular statute or clause of the constitution has been adopted in one State from the statutes or constitution of another, after a judicial construction had been put upon it in such last-mentioned State; in that case the construction is regarded as having been adopted along with the words. But this exception is qualified by the further restriction, as expressed by the courts of several States, unless the circumstances in the State adopting it, be so different as to require a different construction. This latter restriction seems to be unquestioned by any of the courts, and it robs the exception of its importance.

7 Krogg v. Railway Co., 77 Ga. 202.

8 Commonwealth v. Harnett, Gray (Mass.), 450; Bemis v. Becker, I Kansas, 226; Howe v. Welch, 14 Daly (N. Y.), 80; Crocker v. Pearsons, 21 Pac. Rep. 270; 41 Kan. 410; Lane v. Watson, 17 Atl. 117; 51 N. J. Law, 18; McIntyre v. Kaume, 12 Ore. 252; Howard v. Welch, 17 Abb. (N. Y.), N. Cas. 397; Friese v. Tripp, 70 Ill. 496; Cooley Constitutional Limitations, p. 66 and cases there cited.

9. Little v. Smith, 5 Ill. 402; Gage v. Smith, 79 Ill. 219; Gray v. Askew, 3 Ohio, 479; Koontz v. Nabb, 16 Md. 549; Nelson v. Gorce, 34 Ala. 565; Jamison v. Burton, 43 Iowa, 282; Caldwell v. Gale, 11 Mich. 77.

10 Leffingwell v. Warren, 2 Black, 599; Randall v. Brigham, 7 Wall. 523; Lamborn v. Commissioners, 97 U. S. 181; Davis v. Briggs, 97 U. S. 628; Railway Co. v. Ganies, 97 U. S. 697; Louisville, etc. Ry. v. Mississippi, 133 U. S. 587; Peters v. Bain, 133 U. S. 670.

11 Louisville, etc. Ry. Co. v. Palmer, 109 U. S. 244; Jefferson Bank v. Shelby, 1 Black, 436; Pennoyer v. Neff, 95 U. S 714; Cass Co. v. St. Louis, 95 U. S. 360; Hall v. DeCuir, 95 U. S. 485; Gormley v. Clark, 134 U. S. 338; Johnson v. Risk, 137 U. S. 306.

the rulings of a State court on the construction of its constitution or laws have been subject to changes of opinion, the federal courts will, in general, follow the latest settled adjudications; but where a question has been definitely settled by a series of decisions in the State court, such decisions being sustained by reason and authority, and one or two later cases overrule them, against all reason and law, the supreme court will not feel itself bound to follow every oscillation of opinion." And where the United States circuit court in a particular case adopts the construction of a State statute put upon it by the highest courts of the State, and afterwards the State courts overrule the former decisions and interpret the statute differently, this will not authorize a reversal of the judgment of the circuit court.13 In questions of general commercial law, or involving only the general principles of equity,jurisprudence, State decisions, though entitled to great respect, do not furnish a binding rule of decision for the federal courts, and conversely State courts in such matters are not concluded by the rulings of the national courts. 16

15

14

The limitations, exceptions and qualifications of the rule, "that the courts should stand by precedents, and not disturb what is settled," are numerous and important. Many are mentioned in the definitions and in the language already quoted from various opinions by different courts. It has been shown that subordinate courts are in most cases bound absolutely by the decisions of their appellate courts. Other courts, in cases where a disregard of the maxim would tend to an overthrow of property rights acquired on the faith of previous decisions, follow the precedents more closely than in any other class of cases; yet there are many instances where courts, both in England and this country, have in this class of cases departed from it

12 Gelpcke v. Dubuque, 1 Wall. 175; Marshall v. Elgin, 3 McCary, C. Ct. 35.

13 Morgan v. Curtenuis, 20 How. 1; Pease v. Peek, 18 How. 595; Burgess v. Seligman, 107 U. S. 20; Keokuk v. Railway Co., 41 Fed. 305.

14 Supervisors v. Schenck, 5 Wall. 772; Towle v. Forney, 14 N. Y. 423; Hough v. Railway Co., 100 U. S. 213; Burgess v. Seligman, 107 U. S. 20.

15 Nevis v. Scott, 13 Howard, 268; Southard, 12 Howard, 189.

Russell v.

16 Pickle v. The Bank, 88 Tenn. 380; 12 S. W.919; Franklin v. Kelley, 2 Neb. 79.

and have overruled their own decisions previously made. In Webb v. Bell, Siderfin, 440, the court of Queens Bench laid it down that a horse and his rider might be distrained if taken damage feasant, a doctrine expressly overruled by the same court in Story v. Robinson, 6 Term R. 138.

In Doe d. Burdett v. Wright, 2 B. and Ald. 710, and in Doe d. Putland v. Helder, Ib. 782 (1819), the court of Queen's Bench laid it down that the surrender of a satisfied term, assigned to attend the inheritance, might be presumed from the fact of its having remained for a series of years unnoticed in marriage settlements and other family documents. But in the subsequent case of Doe d. Blackwell v. Blowman, 2 B. and Ald. 573 (1831), the same court, having before them their previous decision in the above cases, held that there was no ground under such circumstances for presuming a surrender.

The Supreme Court of Ohio, in the case of Chestnut v. Shane, 16 Ohio, 599, re-reported in 47 American Decisions, 387, held the acknowledgment of a deed by a married woman sufficient, and the deed valid to pass her estate, overruling a former decision of the same court in the case of Connell v. Connell, 6 Ohio, 358. The same case also holds valid a a curative act of the legislature of Ohio giving effect to deeds defectively acknowledged, thereby overruling two former decisions of the same court which had declared the act void.

The Supreme Court of Tennessee, in 1825, put a construction upon their statute of limitations, in reference to the peaceable possession of land for seven years, which must have had the effect of divesting many titles acquired upon the faith of their former decisions made in 1815, which were overruled; and the Supreme Court of the United States followed that of Tennessee in their changed construction of the act. The courts of New York have at different times adopted different rules, materially affecting the rights and liabilities of parties, as to the effect which is to be given as an indorsement of his name by a person other than the payee of a promissory note on the back of the same.18

17 Hickman v. Gaither, 2 Yerg. 200; Green v. Neal, 6 Peters, 291.

18 Hall v. Newcomb, 3 Hill 233, affirmed in 7 Hill, 416.

actly alike and grew out of the same transactions; they were as follows: One Bogardus quitclaimed certain property to which he had no title; he afterwards acquired title, assigned it, and his assignees brought ejectment against the assignees of his original grantee. In the first case it was held that they could recover; in the second that they could not.

What, then, is the true scope and meaning of the maxim ?19 The opinion of Justice Paine, in the case of Kneeland v. Milwaukee, 15 Wis. 454, contains a clear and strong discussion of this question, and I shall quote from it at length. He says: "A change of law by the legislature does not affect things happening before the change. But when a court changes its decision, it does so, not because it has any power to change the law, but because the law was from the beginning different from what it had been held in the former decision. And this, of course, necessarily invalidates all things done under the former, the validity of which depends on the former construction. And from these considerations the maxim 'stare decisis' derives

its chief support. In originally determining what the law is, no court can properly disregard its real convictions in view of the consequences; yet, in determining how far a court should ever feel at liberty to depart from a decision once made, the consequences of such departure, depending upon the extent to which such decision has formed the basis of the business transactions of the community, must undoubtedly be looked at. Men have the right to rely with certainty upon the decision of the highest tribunal in the State in matters where their business is to be regulated by such decision. And when they have so acted, the idea that all their transactions may be uprooted, whenever new judges come upon the bench who believe the former decision to have been very wrong, could not be tolerated in any system. Courts frequently do, and perhaps more frequently ought to, review and change their decisions.

19 Disscussion on this in Callender's Adminis. v. Insurance Co., 23 Pa. St. 471.