Gambar halaman
PDF
ePub
[ocr errors]

relation to franchises is to-day the same as when into the question for purposes of evasion. It is really the above lines from our legal luminary were written, pathetic to behold how tenderly the “people’s ” rights and the State legislature, representing the constitu- are looked after by railway corporations and their tional manifestation of the taxing power, recognized attorneys, retained by the year and in droves. this irrefutable principle when it enacted the recent The State authorities are in no danger of overlaw on franchises. What does Professor Holland stepping the boundaries by insisting that these public write, at page 190 of his work on “The Elements of corporations, accorded valuable privileges by the Jurisprudence?” (mind you). “A franchise can be ! State, should pay for them. They simply say: “Thou acquired only by royal grant, actual or presumed, shalt render unto Caesar that which is Caesar's.” and may be assigned by deed." Naturally assignable The people are protected by this State supervision by deed, naturally divisible into a branch of real better than they were under the former condition, property, yes, but something distinct from the and, as individuals or corporations ("aggregations

grundsatz" or land, and distinct from roadbeds or of individuals, with special legal responsibilities and

structures ” erected upon them. Pray, why not prerogatives "), they are not hindered in their contaxable then distinctly as a special sort of real stitutional right to enjoy the possession of their property,” having not only a value, but a significant, private property in security Section 2 of article ponderous value? Stick to original principles and of the State Constitution is not jeopardized in the you cannot go far astray, senator. Here is more slightest. In fact, it requires a mind trained to authority for the thesis of the State. Look at Taylor the subterfuges and technical evasions practiced by on Corporations, section 477a After distinctly stat- I corporation attorneys to perceive how the section ing that a construction of tax laws that will impose is applicable at all. I would concede that if the double taxation is not to be adopted, unless required power-houses, car stables, etc., were taxed by the by the express words of the statute or by necessary State board of tax commissioners arbitrarily, to the implication, writes: “The franchise of a corporation exclusion of the local assessors, that the section is plainly distinct from its capital or property; con- would have a material bearing, but the refinement sequently, a tax on the franchise, coupled with a of legal reasoning by which these railway attorneys tax on the capital or property of a corporation, is stretch the meaning of a section in the Constitution not double taxation.” Also cases cited in note 4, to suit their own purposes is to me, at least, incomvide note 2, under section 477. How Mr. Hill can prehensible. I notice that Mr. Page, after conceding contrive to drag in Magna Charta in aid of his un- for the purposes of his argument, of course, the constitutional argument is another of those mysteries untenability of the position his predecessors and of sophistry and legal twaddle. What, in the name colleagues have taken in defending the corporations, of the seven wonders of the world, have local says: “The ordinary taxes on real estate, amounting assessors to do with contractual grants, made with to several hundred thousand dollars; the taxes to charter limitations, intended to preserve and demark pay the expenses of the railroad commissioners, the the sovereign State's immediate controlling power taxes of licenses and percentages required by the over a creation, purely and solely of its own beget- terms of the special franchises themselves, and to be ting? so far as its franchises” or “privileges ” acquired by consolidation, all these ordinary, extraapart from and exclusive of the ordinary rights of a ordinary and special taxes, aggregating a million property holder are concerned. Conceded that it has dollars annually (in the case of his company) the Magna Charta rights over its private property, and, company expected to pay,” etc., but substantially to a certain extent, over its “quasi public" property, they did not reckon upon paying anything in consuch as the State's highways. What does that avail sideration of the State granting them the broadest against the fact that its franchise is a special privi- privileges ever granted to any street railway in the lege, grant, incorporeal hereditament, whatever you country, beyond these mere license fees and percentwill, in addition to its other rights as a taxpayer, ages and ordinary taxes on real estate, which any dependent upon the police power of the State for its other private corporation, asking the privilege of constitutional enjoyment, hence responsible to the corporation existence, must pay. Why, of course State and owing to the State. Mr. Hill's invocation not; Mr. Attorney cannot perceive that a railway of “Magna Charta ” and the “State Constitution" corporation is different from any other common is something akin to the summoning up by the un- business corporation, asķing no further privileges lucky fisherman in the fable of his evil genius. It from the State than bare corporate existence. Posproved his undoing, and it will certainly prove Mr. sibly the fairer way would be to pay the corporation Hill's undoing. These franchises that corporations a bonus annually to use public property and dole out hold over public property, while legal and constitu- to the public for additional pay the service to which tional, are only so when subject to the State's wary the public is entitled from any citizen or corporation eye and authority. The sovereignty, as exemplified that it spends its “ nickels ” with. If the franchise is in the State (really only the sovereign people) is worth nothing, Mr. Attorney, why did your commuch more concerned that corporations exercising pany make such a tremendous effort to secure it? valuable privileges pay for them adequately than that Why can your stockholders invest millions of dollars a petty question of local privilege should be dragged in an enterprise whose "franchise" value is not

[ocr errors]

!

worth a paltry million a year to its generous donor? entire abandonment, in the recently-decided case of Now, do not repeat that old story about the license Corbin v. Baker (167 N. Y. 128). fees, railroad commissioners, fees, taxes

on real

Perhaps no one would profess greater surprise estate, other than the taxes on the incorporeal right than the judges of the Court of Appeals themselves, of franchise; it is not relevant, and it shows con- were it suggested that the decision in Corbin v. clusively you are insulting the intelligence of the Baker, founded, as it purports to be, on the authority people and the intelligence of the legislature by doing of the older cases, is, in effect, antagonistic to them.

We understand clearly that your clients' think A brief statement of the facts in Corbin v. Baker is they are doing the public a favor beyond the per- here needed: adventure of repayment by taking the money of the By his will, James Gordon Bennett gave his estate public and assuming the onerous burden of running to his son, one-half in fee and the other half in the railways upon a twenty per cent basis of return trust for his (the testator's) daughter for her life, to your stockholders, when the public could do it for remainder over to her children. At a partition sale one-half of the expense, probably; but your argument of the real estate the trustee, Bennett, Jr., bought about payment of other taxes is not relevant to the the entire property for himself, individually, and the issue, and you will find that it is not so. But sale was thereafter confirmed by the court. The enough of this. The subject does not require fur- life tenant and infant remaindermen, through their ther elucidation. The public knows what it is doing, guardian, were made parties to the action, and all and for once the State legislature framed a law, at the proceedings seem to have been had in due and least, strictly in accordance with the Constitution usual form, all but the one presently to be noted. and the rights of the people — a good law, a sound Bennett, Jr., thereafter sold some of the property law, a wise exercise of the taxing power. Vive la thus purchased to the plaintiff in this action, and it republique, et vive le droit !

is to compel the plaintiff's vendee (the defendant, In reference to the point raised by Ex-Judge Baker) to take title, that the action of Corbin v. Brown as to the methods of administering the tax Baker was brought, which action has been decided by the commissioners, the point does not bear upon in favor of the plaintiff, thereby removing the cloud the constitutionality of the law itself, and is not which the trustee, Bennett's purchase, had put upon within the scope of this article Some of the cor- the property. porations affecied by the law claim that some of

As already stated, it was an immemorial rule of their franchises, now held under a consolidated equity that a trustee could not purchase for himself charter, were yet acquired at different dates, under

the trust estate. "A person cannot act as agent for different franchises, and that hence their taxation another and become himself the buyer," says Chanas one franchise is unfair and improper. This posi- cellor Kent. "It is incompatible with his fiduciary tion of the company also seems to contain a

non- relationship. The rule is founded on the danger of sequitur” also. In the case of Shields v. Ohio (re- imposition and the presumption of fraud inaccessible ported in 95 U. S. 319) the court held that the to the eye of the court." It matters not that the consolidation of different corporations into

sale is properly advertised, that it is fair and open, works their individual dissolution, and forms a new

or that the trustee in buying pays a fair price. If set of liabilities and responsibilities.

the trustee buys, while his title is good against all the ALEXANDER LEE HIRSCHBERG.

world, it is yet voidable as against the cestui, at his, MT. VERNON, N. Y., January, 1902.

the cestui's, election. The cestui can either affirm the sale and thus perfect the title in the trustee, or

he can insist on a resale of the property. If it brings THE TRUSTEE'S RIGHT TO PURCHASE

less on the resale than the trustee has previously THE TRUST ESTATE.

bid, the trustee can be held to his bargain. Such

was the rule laid down by Kent in Davoue v. FanDoes Corbin v. BAKER (167 N. Y. 128) OVERRULE ning (2 Johns. Ch. 251), where the great chancellor SCHOLLE V. SCHOLLE (101 N. Y. 161) ?

exhaustively reviewed the English and American

one

cases.

No doctrine of equity has been more strenuously Later the case of Fulton v. Whitney (66 N. Y. insisted upon than that the trustee is disabled by the 548), one of the long line of cases reaffirming fiduciary character of his position from purchasing Davoue v. Fanning laid stress on the point that the for himself the trust estate; and no rule has been permission, in a decree of foreclosure or partition, more rigidly enforced than that such a purchase by to all parties to the action to buy at the sale,“ does a trustee, though giving him a title good as against not affect equities which may exist between the purthe rest of the world, is voidable at the election of chaser and any other person for whose benefit the the cestui que trust.

purchase may be deemed to have been made," such An unbroken line of decisions upheld this rule in permission being only pro forma and based on the all its pristine vigor in New York until its modific theory that all parties to the action were disabled cation in the case of Scholle v. Scholle (101 N. Y. from buying, or, perhaps, that the mortgagee, to 161), and what appears to be its emasculation, if not | whom the title anciently passed subject to the mort

gagor's equity of redemption, was trustee for the argues that if the court had power on a special mortgagee, and that permission was required for him application to permit the trustee to take an indefeato bid.

sible title, it also has power to do this on the proBut there came a line of cases in which the trustee, ceedings for confirmation. as in Corbin v. Baker, had an interest in the trust In passing, it may well be questioned whether the estate, and it was argued with great force that he court has the power to take away from the cestui should be allowed to protect that interest by bidding his absolute right to affirm or disaffirm under any at the sale, and, if he bid the highest price, that the and all circumstances. By taking the matter in its property should go to him individually as purchaser. own hands, does not the court elect for the cestui? Otherwise, were the trustee prohibited from bidding, But is not this a question more of expediency than it might be bought by a stranger for much less than of mere power? What adequate protection is there the trustee himself was willing to pay, and thus occa- for the cestui in the confirmation proceeding, followsion loss, not only to the trustee himself, but to the 'ing, as it does, so quickly upon the sale, and no cestui, as well. Although it is plain that whether the specific judicial inquiry being had? The cestui trustee has or has not an interest of his own to pro- might not even be aware that the trustee intended tect, he will seek to buy as cheaply as possible, if I to retain for himself the purchase he had made. permitted to buy at all, and the same danger to the And, indeed, in the absence of any statement or cestui's interest is present in either case.

warning from his trustee, the cestui would have a But equity had provided for such a case. As far perfect right to assume that the purchase of the back as Campbell v. Walker (in 5 Vesey, 678) it was trust estate by the trustee was for his (the cestui's) held that a trustee having an interest in the trust protection and benefit It is of the very essence of estate to protect could file a bill in chancery, stating the trust relationship that the cestui should rest what was bid for the property and offering to pay peacefully in the belief that the trustee is doing more. The court would, after hearing all interested I everything with an eye single to his (the cestui's) parties, practically divest him of his character of interest. When the trustee seis up an adverse title trustee, thus preventing all the consequences of his and the cestui has had full time and opportunity to acting both for his cestui and himself.

investigate, then, and not until then, can the cestui The method later indicated in Davoue v. Fanning be expected to shift for himself, and a court of was for a trustee to file his bill and submit a dis- equity will not shut the door with a slam on his interested appraisal of the value of the property, with right to disaffirm his trustee's action. At least, under his offer to pay a price equal to, or more than, such the rule in the Scholle case, the permission granted appraised value. On such application and on hearing to the trustee prior to the sale to purchase on his all parties the court could give the trustee the right own account was, in effect, the divestiture of his trusto take an absolutely indefeasible title.

teeship, in that it was a warning to the cestui to Look at these minute precautions, and then note look out for his own interest. how they have been whittled away.

But even this rule did not necessarily insure an The rule continued to be thus enforced until the honestly conducted sale. For, with the trustee still decision in Scholle v. Scholle, where the first modi-in control and managing the sale, in how many ways fication was introduced. Instead of an appraisal could he, by fixing an unfavorable time and place, and a bid being submitted by the trustee, a referee by frequent change of date and postponements and was appointed by the court to take testimony, and, by discouraging bidders, further his individual interafter hearing all parties, reported in favor of allow- 'ests and seek to purchase the property at the lowest ing the trustee to bid. It was not deemed advisable possible price, when, as trustee, it would be his duty in the Scholle case to fix an upset-price for the to obtain the highest possible price? The conflict property, as, in the opinion of the experts who testi- of interest and duty generally would result unfavorfied, such a course tended to keep bidders away. ably to the interests of the cestui and the policy of Whereas, until Scholle v. Scholle, an infant cestui the law enunciated over and over is not to place one year old would have had until his majority, the trustee in such a position. As Kent says: “It is and, perhaps, even twenty years thereafter to dis- poisonous in its consequences." affirm his trustee's purchase; by means of this special Through these modifications and changes the law permission granted the cestui's right is cut down to-day, as manifested in Corbin v. Baker, seems to to the period covered by the suit. If we say the be pretty nearly the reverse of what it was in right was of too great duration, may we not also Davoue v. Fanning, and, indeed, in cases as recent say that the way in which it is cut off is too

as Fulton v. Whitney. Gradually and by degrees summary?

imperceptible, at least to it, the Court of Appeals has And now, thirty years later, even the precautions drifted away from the old rule, until now a trustee taken in Scholle v. Scholle are dispensed with, and having an interest of his own to protect (and, perin Corbin v. Baker the judicial confirmation of the haps, even a trustee having no interest of his own sale is held to vest an indefeasible title in the pur- to protect) may buy the trust property and get an chasing trustee.

indefeasible title against his cestui, unless the court, In his opinion in the latter case, Judge Gray on the application to confirm the sale, sees that some

[ocr errors]

fraud has been practiced, or that the price is grossly wisdom of the chancellors who molded and applied inadequate and sets the sale aside. But will courts, the rule for centuries, and especially would it be a of their own motion, do this? Must not the fraud fitting memorial to our own great chancellor, James be apparent and glaring, and must it not practically Kent. be pointed out by the cestui? If this is so, the change

ROBERT L. CUTTING, LL. B. in the costui's position is fundamental. First, he No. 28 EAST 28th St., New YORK. has an absolute right to set aside his trustee's purchase. Next, his absolute right may be taken from NOVEL USES OF THE WRIT OF INJUNCTION. him by specific judicial investigation under certain safeguards thrown around his interests,

as in

The writ of injunction is, indeed, a wonderful Scholle v. Scholle. Finally, his right is gone, and writ. Originally its jurisdiction was limited to the court may give the trustee an indefeasible title equitable remedies, but of late years its scope has by simply confirming the sale, which, in the absence broadened, and its aid is now invoked to restrain of fraud on its face, or proof of actual fraud, it will alike the disturber of a church meeting and to presumably do. What about Kent's presumption of curb the emotions of the persistent lover. The writer fraud inaccessible to the eye of the court, and de- gives in detail two peculiar cases in which the aid of rived from the relation of the parties?

a writ of

junction was recently invoked. One of If the whole matter is to be left to the court on Mr. John Kensit's followers, who is awaiting trial the proceedings to confirm, and, if the court has : on the charge of “ brawling” in church, was enjoined power to confirm such a purchase, which Judge Gray from visiting the church in question in the meantells us is the result of Scholle v. Scholle, then the time for the purpose of creating a disturbance, a court has usurped the right of election formerly thing he had threatened to do. The wardens of the belonging to the cestui, and, at least in cases where church, fearing a disturbance, applied for and obthe trustee has an interest of his own to protect, the tained from Mr Justice Day, sitting in chambers, a cestui is deprived of his ancient right of election. writ of injunction restraining the offender from

Clearly there is no longer for the cestui even the visiting their church. This is certainly a novel use protection that the rule in the Scholle case gave him. of a law writ, but people must go to church to pray Now it is not such a far cry from Scholle v. Scholle and behave themselves and not to engage in unpleasto Corbin v. Baker. The former, it is true, gave the 'ant discussions on theology. The writer recalls a cestui a little better chance, in that the trustee's somewhat similar case which happened in Suffol application for permission to buy was notice to him county several years ago. A certain individual had a that the trustee was openly about to look after his habit of going to a certain church in Boston, an: own interests, in derogation of the cestui's. Because in the midst of the services he would arise and prothe trustee, as a purchaser, is incompatible with the ceed to call members of the congregation such names trustee trying to get the highest price for the trust as "whitened sepulchres,” etc. The man was evi

dently deranged and suffering from religious monoThe vice of the whole thing is to leave the control mania. He was arrested, tried and convicted in both and management of the sale in the trustee's hands the Municipal and Superior Courts. He was called where permission has been given to the trustee to for sentence in the Superior Court before Mr. Jusbuy. The trustee should resign or be removed and tice Sherman, and the following amusing dialogue another and an entirely disinterested trustee be ap- took place between the judge and the prisoner: pointed by the court to conduct the sale. If the

Judge Sherman - If I place you on probation, can trustee is an honest man, he should be glad to escape you keep away from that church? from such an invidious position.

Defendant — No, your honor, I don't think I can. Desirable as it is in the interests of the market- Judge — You have no more right to make a disability of titles to have some fixed rule by which a turbance in church than you have to make a sce:re purchaser may know whether a title coming through in a man's private dwelling. one in a fiduciary position is good or bad, it is better The judge tried to reason with the defendant in his that many titles should fail and remain unmarket- customary good-natured way, but to no avail. The able than that trustees should have a new field of defendant, having refused probation with proper fraud thrown open to them.

conditions, was committed to jail in default of payIt is plain that even the rule in Scholle v. Scholle ment of a small fine. may not be a sufficient safeguard against fraud on Another novel use of the writ of injunction is the part of trustees, but the Court of Appeals might seen in the following case: A certain young lady, an think it inexpedient to retrace its steps and to decide elocutionist and reader, of Toledo, Ohio, has been that a trustee cannot, under any circumstances, buy greatly annoyed of late by the attentions of a certain the trust estate, unless he resigns his trust, thereby well-known lawyer and politician of that city. He reaffirming the old chancery rule.

seizes upon every opportunity of pouring into her ear The legislature, however, can very properly do his tale of love. And, while no doubt, she was this. The remedy would be simple, efficacious, easily pleased with the first instalments, she has sickened workable and fair to all. It would be a tribute to the of his wearisome repetitions. After trying both

estate.

entreaties and threats, she, as a last resort, appeale:1 provide for the careful administration of the penal to the Court of Common Pleas, which has enjoined laws, then it is equally so that the civil courts occupy her persistent admirer from further advances. If themselves with so-called frivolous cases than that the injunction proves unsuccessful, she might try one citizen should undergo any privation of rights elocution on him. “Love,” says Dr. Johnson, “is at the hands of another, because of the expense the folly of a wise man and the wisdom of a fool.” which the first must incur in order to secure justice. As a lawyer, I am unable to see on what grounds a As to any litigation being unnecessary, this can writ of injunction can issue in such a case; perhaps a only be determined by the event in each case. There court of equity regards unsolicited and persistent is always, at least, one party wrong in every suit, attentions from undesirable suitors as repeated tres- and, had he done what he should, it would have been passes. In such a case a court of equity clearly has unnecessary to try the issue, but, having failed so to competent jurisdiction. Time and again has the do, it becomes absolutely essential that justice be writ of injunction protected the weak and suffering done and that promptly and without expense to him from the aggressions of the rich and powerful, and who has been wronged. to-day, at the beginning of the twentieth century, Nor is the other reason for the imposition of fees bachelor girls invoke its powerful aid to shield them more tenable. It might be the case if the scope of from the annoying attentions of undesirable suitors. the judicial institutions were limited in the same

Joseph M. SULLIVAN. manner as that of the postoffice, for example, perOF THE SUFFOLK (Mass.) Bar.

forming a certain act for each individual who re

quires its service, and receiving remunerations in THE PAYMENT OF FEES AND THE CUS. accordance with the extent of that service, but

rendering no general service to the whole comTODY OF PAPERS.

munity by its very existence. The summons having been served, the next tribu

Why do courts exist? They exist to avoid the lation for the plaintiff, and one which often deters taking of revenge or the seeking of satisfaction by him altogether from the effort to preserve his rights, those who believe themselves injured, by their own is the payment of the required fees. He must pay hands, thereby endangering public peace, and to for verifying the complaint, for filing the note of avoid the determination of disputes in favor of he issue, in some courts a trial fee, and in all courts a

who is the mightier, regardless of those standards jury fee, if he demand a jury. He cannot secure of justice which we believe to be the foundation and the attendance of his witnesses, save by paying indispensable condition of society. them their fees and mileage, nor can he, if success- Let him, therefore, who believes that his rights ful, enter judgment or issue execution without first have been trampled on by his neighbor have free paying tribute to the clerk and the sheriff. recourse to that protection, which, for the benefit of

Is this as it should be? To answer this question the rest of society, he is compelled to resort to rather we must examine the considerations which are ad- than take the law in his own hands. Let every pubvanced as having caused the State to impose this lic officer be paid by the State the compensation such burden. They are two: First, that what is termed as is in commercial or other lines paid for services frivolous and unnecessary litigation might be dis- of like character and all fees be abolished. couraged, and, second, that those who make use of The value of the judicial institutions is but, to a the courts should pay for their maintenance. small degree, measured by the amount of actual liti

This leads us to inquire, first of all, whether there gation disposed of. Its very existence is a benefit be such a thing as frivolous or unnecessary litiga- to each and every man by diffusing a general knowltion? As to the former of these adjectives it is edge that its functions can at once be invoked if enough to call attention to the universal acclaim wrong be done. with which all men of spirit greet one who spares How unjust, therefore, to impose the whole burden no time or expense to enforce his legal rights for on those only who actually avail themselves of its principle's sake, no matter how small or insignificant active benefits. We clearly recognize this in every the actual amount at stake. This shows that there other sphere of governmental action. Not he alone is abroad, as there should be, an earnest belief in who suffers loss by fire pays taxes to support the the assertion of every legal right, and nothing can be fire department; not he alone who is robbed, asdeemed frivolous which tends to promote and pre- saulted or otherwise criminally attacked pays the serve that sentiment, for its value to all is inesti

expense of the police — and so on ad infinitum. mable. It is not merely the carrying through of the Therefore, as every man pays for the security of the particular litigation in question which is to be fire department, the police, the district attorneys, considered, but the maintaining of universal proper the criminal courts, because of their potential benerespect for the rights of others, even in matters fits, even if not actually availed of, so should each the most trifling. If it is better that ten guilty citizen pay his share of the expense of maintaining men escape than that one innocent man be unjustly civil courts and their adjuncts, because of the awe convicted, and, in recognition of this principle, they inspire and the fact that they are always at criminal courts be maintained at a large expense to command if needed. Certainly none should begrudge

« SebelumnyaLanjutkan »