There are numerous other citations, state and national, bearing upon this subject, which I shall not take time to review. These decisions, as well as other established principles, considered, I conclude that contracts entered into between parties under a valid law become vested interests, which cannot be annulled, unless there is something in the law itself implying that contracts made under it must be controlled or affected by possible changes in the law. It may be said that all laws, regardless of their phraseology, are subject to amendment, and that all who make contracts under them do so with implied notice of such change; but to concede this would be an admission that no contract can be made which cannot be legislated out of existence. This is repugnant to all constitutional law and cannot be tolerated. It is also concluded that when the law itself, through designated officers, fixes the rate, instead of the parties doing it by contract, such rate is subject to change according to a change of the law or action of such officers; also that, even when the law directs how the rate may be fixed by certain officers, until they so fix it, any contract between the parties is valid. The next question is as to what law was in operation when these contracts here involved were made. They were severally made in September and June, 1889, June, 1891, and May, 1892. The Constitution was adopted by the people in November, 1889, and approved by Congress July 3, 1890. Whether the Constitution went into effect in 1889 or 1890, two of the contracts were prior, and three were subsequent, to that event. But, without discussion of the authorities cited on the question, I do not think that the Constitution on this subject is self-operating, and did not go into effect until the legislative enactment putting it into motion, which was, as stated, in 1895, long after all the contracts were made. I think the contracts were, under the law, valid when made, and so continue, notwithstanding the subsequent Constitution and laws, and that the demurrer should be sustained. Certainly it may be argued, as it has been, that the enforcement of these contracts is a hardship to the company, as well as to the other water users, who may have to pay a higher rate to make good to the company its losses on them. It is, however, presumed that when these contracts were made the predecessor in interest of this company received some consideration for making them, which is presumed to inure to the benefit of this company. At any rate, it bought with knowledge of them. If it made an improvident contract, it can hardly ask the court to correct that misfortune, which is not alleged to be the result of either fraud or mistake. The only pretext the court can adopt to annul these contracts would be that a change of facts and circumstances has rendered unconscionable what was once fair and reasonable. I would not feel justified in so doing. The demurrer is sustained. In re DAY. (District Court, M. D. Tennessee. May 8, 1909.)† No. 1,909. BANKRUPTCY (§ 140*)-ASSETS-INSURANCE POLICIES-TRUST PROPERTY. On a petition filed by the trustee in bankruptcy to review an order of the referee holding that the proceeds of certain life insurance policies taken out by the bankrupt in favor of his wife, which did not accrue until after his death, belonged to the wife, held, that they did not constitute a trust fund held by her for the benefit of herself and children, free from the claims of the creditors of the firm, in which the husband and wife were partners, under Acts Tenn. 1897, c. 82. [Ed. Note. For other cases, see Bankruptcy, Cent. Dig. § 225; Dec. Dig. § 140.*] In the matter of Mary Day, bankrupt. On petition of receiver to review an order of the referee. Reversed, with directions. W. H. Williamson, for trustee. W. S. Lawrence and W. D. Covington, for bankrupt. SANFORD, District Judge. I am of opinion that the proceeds of the life insurance policies in question are subject to the claims of the creditors of the firm of which Mrs. Day, the bankrupt, was a partner, and do not constitute a trust fund held by her for the benefit of herself and children, free from the claims of such creditors. 1. It is unnecessary to determine whether the proceeds of the policies taken out by R. E. Day on his life in favor of his wife, which did not accrue until after his death, at a time when she was a feme sole, became her technical separate estate under the doctrine stated in Southern Insurance Co. v. Booker, 9 Heisk. (Tenn.) 606, 618, 24 Am. Rep. 344, and Scobey v. Waters, 10 Lea (Tenn.) 551, 562, the force of which is perhaps indirectly impaired by the subsequent case of Handwerker v. Diermeyer, 96 Tenn. 619, 36 S. W. 869. Whether the proceeds of such policies constitute either a general or separate estate of Mrs. Day, they are subject to the claims of the firm's creditors under the provisions of chapter 82 of the Acts of Tennessee of 1897. It was held by the Supreme Court of Tennessee in 1893, in Theus v. Dugger, 93 Tenn. 41, 23 S. W. 135, that, where a married woman had embarked her separate estate in a mercantile business as a partner, she was not bound by a note executed for partnership purposes in the name of the firm, so that a personal judgment could be rendered against her on such note, over her plea of coverture, or so that her separate estate so embarked in the business could be subjected to the payment of such note in the absence of an express contract to that effect. Shortly afterwards the act of 1897 was passed, which provided that: "When married women are engaged in the mercantile or manufacturing business in their own names, or by an agent, or as partner, they shall be liable for the debts incurred in the conduct of such business as if they were feme soles, and no plea of coverture will avail in such cases." •For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes Received for publication February 22, 1910. While this statute is to be strictly construed as one in derogation of the common law, nevertheless, even when thus construed, it plainly makes all the property of a married woman liable for the partnership debts exactly as if she were unmarried, so that not merely her general estate, but also her technical separate estate, is subject to their payment. If it had been intended merely to remove the defense of coverture in a suit upon such debts, and to render only her general estate liable to be taken in satisfaction therefor, manifestly nothing would have been necessary in the act other than the provision that in suits upon partnership debts no plea of coverture would avail, and the further provision that such married women should "be liable for the debts incurred in the conduct of such business as if they were feme soles" would be entirely superfluous. Clearly, therefore, as all of the property of a feme sole would be liable for the firm debts, by the express terms of the statute all the property of a married woman must be equally liable. This construction is in accord with the rule stated in 21 Cyc. 1466, that: "When power is given a married woman by statute to carry on a trade or business on her separate account, she may contract debts in relation to such business, and she personally, if the statute so provides, or at least her separate property, will be liable for the same." The case of Burk v. Platt, 88 Ind. 283, 285, which is among those cited in support of this proposition, is directly in point. The question in that case was whether the separate real estate of a married woman was subject to sale upon an execution issued against her under a judgment upon a contract made during coverture in carrying on business as the member of a firm. Under an Indiana statute all lands of a married woman were made her separate estate. The court said: "The course of legislation is decidedly in the direction of enlarging the property rights of married women, and these enlarged rights necessarily carry with them increased liabilities. By section 5122, Rev. St. 1881, coverture is no bar to a married woman contracting debts in carrying on any trade, labor, or business on her sole and separate account, or as a partner with another. If she can contract such debts, it follows that their collection may be enforced; but if they can be enforced only against her personal property, to the exemption of her real estate, the power to contract debts in her trade or business would be greatly limited. Credit in commercial matters is based largely upon the ability of the debtor to pay his debts. Certainly the Legislature did not intend to confer upon married women the power to contract debts for the purposes of their trade or business, and at the same time greatly to impair their credit by making their personal property only subject to execution to satisfy such debts. We think it must be held, in all cases where a married woman may contract a debt, that her property, real as well as personal, is liable for its payment, the same as if she were unmarried." By parity of reasoning, it must be held that in all cases where a married woman may under the Tennessee statute contract a business debt, her estate, both general and separate, is liable for its payment, as if she were unmarried. 2. Sections 2294 and 2478 of the Code of Tennessee of 1858 (Shannon's Code, §§ 4030, 4231), providing that any insurance effected by a husband on his own life shall inure to the benefit of the widow and children free from claims of his creditors, do not, where the husband effects the insurance on his own life for the benefit of his wife as bene ficiary, create a trust fund in favor of the wife and children as a family, which cannot be reached by her creditors. While it is true that in the case of Harvey v. Harrison, 89 Tenn. 470, 14 S. W. 1083, in which these statutes were considered, it was said that the purpose of these enactments was to enable the husband or father to provide a fund after his death for his family, the question there involved was merely whether a policy taken out by the husband on his own life in favor of his wife became subject to the claims of his creditors because the children were not also named as beneficiaries in the policy, and the only point decided was that the proceeds of such policy, when collected by the wife, were free from the claims of his creditors. The question as to the capacity in which she held such proceeds, whether as her general or separate estate, or in trust for herself and the children, was neither involved in the case nor referred to in the opinion. It is clear, however, that the statutes in question relate only to exemption from liability for the debts of the husband, and in no way create any exemption from liability for the debts of the beneficiaries themselves as named in the policies. 3. As it appears that the petition for adjudication in bankruptcy was filed against Mrs. Day, as surviving partner of Day & Co., and neither the stipulated facts nor the referee's certificate show that there are any of her individual creditors whose claims are involved, it is unnecessary at this time to pass upon their rights, if, any, in the proceeds of the policies. 4. An order will accordingly be entered, overruling the order made by the referee in reference to the policies, and directing that the proceeds thereof, now in the hands of the Nashville Trust Company, be turned over to the trustee in this cause, to be distributed for the benefit of the creditors of the firm of R. E. Day & Co. MILLER v. CHICAGO & A. R. CO. CHICAGO & A. R. CO. v. MILLER. (Circuit Court, S. D. New York. Decenber 8, 1909.) 1. CORPORATIONS (§ 591*)-CONSOLIDATION-RIGHTS OF NONASSENTING STOCK HOLDERS. Allegations that a stockholder in a railroad company purchased the share of an issue of bonds by the company allotted to his stock, that he acquiesced in and accepted a special dividend and also assented to a lease of all the company's property to another company, and that such acts were all done with a view to the consolidation of the two companies and with the stockholders' knowledge and consent, are not sufficient to charge him with knowledge of such purpose to consolidate, or with consenting thereto, which would entitle the company to a decree requiring him to surrender his stock in exchange for stock in the new company. [Ed. Note. For other cases, see Corporations, Dec. Dig. § 591.* Rights and liabilities of stockholders of railroads on consolidation, see note to Bonner v. Terre Haute & I. R. Co., 81 C. C. A. 480.] For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 2. CORPORATIONS (§ 591*) - SUIT BY STOCKHOLDER AGAINST CORPORATION PLEADING. Exceptions to the answer to a bill filed by a stockholder against the corporation considered. [Ed. Note.—For other cases, see Corporations, Dec. Dig. § 591.*] In Equity. Suit by William Starr Miller against the Chicago & Alton Railroad Company. On demurrer to cross-bill and exceptions to answer to original bill. Demurrer sustained, and exceptions sustained in part. Philbin, Beekman & Menken, for complainant. LACOMBE, Circuit Judge. A demurrer to the original bill was heretofore considered by this court and overruled. 171 Fed. 253. The facts will be found sufficiently stated in that opinion. The crossbill is brought to compel plaintiff to give up his shares of stock in the old Alton Railroad for stock of the Consolidated Railroad as and on the terms provided in the agreement of consolidation, upon the theory that the complainant assented to, approved, and participated in said consolidation. The facts upon which cross-complainant undertakes to establish such assent and participation are these: (A) In 1899, more than six years before consolidation and a year before the Alton Railway was incorporated, the old Alton Railroad issued $40,000,000 mortgage bonds, to which its stockholders were given the right to subscribe on favorable terms. Miller approved and consented to this issue, and subscribed for and purchased his ratable share of said bonds. (B) In the year 1900 the old Alton Railroad duly declared and paid a special dividend of 30 per cent. on its stock. Miller approved and consented to said dividend and received his ratable share thereof. (C) On April 3, 1900, the old Alton Railroad duly leased all its property to the Alton. Railway for a rental amounting to the entire net earnings of the property demised. Miller consented to and ratified such lease and has accepted dividends arising from and in accordance with the terms of the lease. The cross-bill avers that these three transactions were "each and all done with the purpose of effectuating and as a means of effectuating the consolidation of the old Alton Railroad and the Alton Railway herein described. On information and belief, each of said steps was taken with the knowledge and consent of the respondent and participated in by him." It will be observed that the pleader does not assert, even on information and belief, that Miller himself had any "purpose of effectuating consolidation," or even any knowledge that such was the purpose of the individuals who caused these preliminary steps to be taken. In a subsequent paragraph (14) the cross-bill alleges that "respondent assented to, approved, and participated in said consolidation"; but this allegation is qualified in the same paragraph by the allegation "that by all and singular the acts of acquiescence, ratification, and consent heretofore alleged, and by other and divers acts, the For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes |