personal convenience, pleasure and comfort as are reasonably suitable to the passenger's station in life, the journey he is taking and possible accidents, sickness and sojournings on the way, for which a reasonably prudent man would provide. There is no distinction as to street car passengers from others, and the court in reversing the lower court, said it thinks that there are "sound reasons for denying in the case at bar appellant's contention that a recovery in full for his loss of property may be predicated on the failure of appellee's conductor to protect him from personal violence." If the position taken by the court in its preliminary argumentation is correct, the judg ment ought to have been affirmed because on a five cent fare to ride to one's home or downtown, there ought not to be any question of expenses for a journey and very little need for money for contingencies. The judgment sustaining the demurrer ought to have been affirmed, because of the maxim de minimis non curat lex. Had jewelry or an overcoat have been taken the question would be different, and besides these articles might be supposed to be in full view of the carrier. RECENT DECISIONS BY THE NEW YORK COUNTY LAWYERS' ASSOCIATION COMMITTEE ON PROFESSIONAL ETH ICS. QUESTION No. 81. Name-lawyer doing business of collections under assumed name-disapproved. Solicitation-lawyer's employment of solicitors for procuring employment to make collections, though without litigation-disapproved. Fees-recommending other lawyers and receiving compensation for the recommendation by division of fees or otherwise-disapproved. Relation to Other Lawyers-recommending other lawyers and receiving compensation for the recommendation by division of fees or otherwise disapproved. First-Is it unprofessional or censurable for an attorney to record with the County Clerk of New York County a certificate showing that he is doing business under an assumed name as a mercantile agency, with the object of doing a collection business, which business shall consist of employing solicitors to solicit claims for collection, without any intention to institute a law suit for the recovery of the claims; said collection business being con ducted through collectors and through the mails? Second-Assuming that the answer to the question is in the negative, is it unprofessional or censurable or champertous for the attorney conducting said agency, to recommend to his clients, friends of his, attorneys, who would institute actions for the recovery of claims in the event said claims cannot be collected by him through his mercantile agency: (a) If the attorney conducting the mercantile agency should be compensated for his recommendations, whether by a division of the fees or be compensated in some other form and not out of the fees, it being clearly understood that the attorneys who institute actions are to be paid, not by the agency, but by the clients? (b) If there be no division of fees between them, nor any other compensation given for the recommendation of the actions to be instituted? Third-Is it, in the opinion of your Committee, champertous, for an attorney person. ally to engage solicitors to solicit for collections, claims upon which suit is to be instituted by the attorney, where the solicitor is not paid a part of the fees received by the attor ney, but is paid a weekly salary for general services rendered to the attorney, inclusive of services as a solicitor, and where said salary is paid to the solicitor, irrespective of whether he obtains any claims for the attorney upon which suit is to be instituted or not? ANSWER No. 81. In the opinion of the Committee, it is improper for a lawyer to engage in professional employment under an assumed name; the making of collections by a lawyer is professional employment; and the employment of solicitors by a lawyer to procure claims for collection, whether with or without litigation, is improper, regardless of the method of compensating the solicitors; if the objectionable features of solicitation and anonymity be removed, it is not improper for a lawyer to undertake the making of collections, with or without litigation, or to conduct a mercantile agency or to recommend another lawyer for employment by his clients; but all division of compensation between lawyers should be based upon the sharing of professional responsibility or service, and a division of fees merely because of the recommendation of another is not proper. (The Committee directs attention to its previous Answers to Questions No. 42, 47 and 98, and to Canons 27 and 28 of the American Bar Association.) RIGHTS OF LIFE TENANT AND RE- In a recent editorial we referred to the English rule on this subject and then remarked that, according to it, "the interests life tenants or remaindermen might have in a trust fund would not seem to depend so much on the intent of a trustor as upon the discretion of directors of a corporation." We then also discussed the three lines of opinion prevailing in the American courts on the matter. We now propose to examine more fully the English rule as developed in comparatively recent decisions by the courts of that country; and to give a brief resume of the principles on which accounting as between capital and income should-according to these decisions-be made, in respect of the earnings of invested funds. To begin with, no stereotyped definition of the terms capital and income can be given, for, as the rules set out below themselves sufficiently show they are variously intercepted, according to the nature of the business and the views of the persons interested. Thus, while a company may be prevented from dissipating its capital to the injury of creditors, there is no restraint on the shareholders to observe strict accounting principles with regard to, say, a "wasting" asset. If the requisite majority of the shareholders declare the gross profits as dividend, a conscientious objector who may wish part of them put to capital can only attain his wish by persuading the rest of the share ulations must be observed; if they do not, the shareholders can do as they like, so long as they do not misapply their capital and cheat their creditors." This contractual force of a company's regulations also materially helps to settle. whether receipts from it are to be regarded as capital or income. When a company has power to apportion its profits by distributing so much as income or dividend. and adding so much to its capital, everyone becoming a member of the company "either originally or by purchase of shares" is bound by his contract to accept as income or dividend so much as the company declares to fall under that denomination. That guiding principle was laid down, and will be found explained at length, in Lord Hatherley's judgment In Re Barton's Trust (1868) 5 Eq. 244. Illustrations of the rule. are frequent among the decided cases. Thus, even where a company declaring a bonus has power to add to its capital and pays a bonus out of accumulated profits, such a bonus is to be regarded as income even though the fund from which it has been paid may have been used as floating capital, if the fund has not been formally added to capital. On the other hand, where the company has not power to add to its capital, and a bonus is paid out of a fund formed out of undivided profits and applied to capital purposes the bonus is to be treated as capital. The distinction between the two cases is to be found in the inference to be drawn as to the intention of the company. In the first case, the absence of any reference to the comholders to adopt his policy. "There is noth-pany's power of adding to capital raised ing in the Companies Acts," said Lord Jus- a presumption that no addition to it was tice Lindley in Lee (1889) 41 CH. D. 1, "to | intended; whereas, in the latter instance, show what is to go to capital account, or what is to go to revenue account. We know perfectly well that business men often differ in opinion about such things. Such matters are left to the shareholders. They may or may not have a sinking fund or a deterioration fund, and the articles of association may or may not contain regulations on these matters. It they do the reg the application to capital having in fact taken place, that was, in the absence of express powers, deemed equivalent to an indication of the company's intention to thenceforth treat that portion of its accumulated profits as capital. The results of the foregoing cases may be comprehended in the convenient general statement, that everything is divisible. as income till it is capitalized; but when the company ceases to exist owing to liquidation supervening, the rule is not applicable. In re Armitage (1893), 3 Ch. 337, the company in question, which had not power to add to its capital, returned in liquidation the paid up capital and something more, the surplus being attributable to an accumulation of profits not declared as dividends. The surplus was held to be capital and to go to the remainderman, for though it had not been capitalized, neither had it been declared as dividend or bonus, or dealt with by the company in any way. And that decision was also based on this further ground, that as, in the event of the shares having been sold at a profit by the executors themselves, the tenant-for-life could not claim the profit, neither could he claim a profit made on realization through liquidation. DONALD MACKAY. Glasgow, Scotland. THE BULK SALES LAW. The sentiment prompting the enactment of that class of legislation known as Bulk Sales Laws was first generally responded to in 1903. If uniformity were desired. that object has not been attained, and judicial interpretation is even less uniform. The situation is such that any attempt to classify the various decisions and compare the acts construed with the language of our own would extend this paper beyond the length permissible or proper on this occasion. Reference, therefore, will be had only to the comparatively few cases which would seem to be of value in construing the Kansas Act. Nor is it desired that specific reference to those respects in which the law fails to afford protection to creditors, or wherein our law is less stringent than those of other states, be taken as an implied criticism of the law or a suggestion that it be made more harsh or drastic, as I do not care to assume the role of advisor to the legislature or to argue for or against the wisdom or expediency of legislation of this character. The question as to the constitutionality of the law may be dismissed with the observation that, while over thirty states have adopted it, the courts of only four or five have found it to be offensive to either state or federal constitution. The Connecticut and Michigan Acts have been approved by the Supreme Court of the United States.1 Section One regulates the "sale or disposal" of a stock of merchandise. Section Three excepts sales by administrators, trustees in bankruptcy, public officers acting under judicial process, etc. What transfers, then, are within the statute? This question has given rise to no little discussion. A chattel mortgage, giving the mortgagor the right to remain in possession, has several times been held to be not within the law. There seems to be no dissent from this.2 The question as to whether a sale by a partner of his interest to his co-partner requires the observance of the Bulk Sales Law has arisen several times. The courts of Georgia and Indiana hold that in those transactions the requirements of the law need not be met. It was held in Tennessee, however, that the sale of an interest for the purpose of taking the vendee in as a partner was within the statute, and Georgia once held that a sale of a half interest followed in a few weeks by a sale of the remaining interest to the same person was a sale within the meaning of the law. It has been held that a voluntary assignment (not statutory) to a trustee for the benefit of creditors, and a sale by him (1) Lemieux v. Young, 29 Sup. Ct. Rep. 174; Kidd v. Musselman, 30 Sup. Ct. Rep. 606. (2) Daniels v. Brewing Co., 150 Pac. (Wash.) 609; Noble v. Gro. Co., 127 Pac. (Okla.) 14; Wasserman V. McDonnell, 76 N. E. (Mass.) 959; Hannah v. Richter, 112 N. E. (Mich.) 713. (3) Taylor v. Folds, 58 S. E. (Ga.) 683; Yancey v. Lamar, 78 S. E. (Ga.) 1078; Shoe Co. v. Olds, 96 N. E. (Ind.) 592. in bulk does not necessitate a compliance with the Act. A contrary conclusion was reached in Oklahoma,' and in Texas it was said that such a transfer which preferred certain creditors was within. the statute. It has been twice held that a transfer to a creditor in acquittance of a debt, if the value of the property did not exceed the obligation, is not such a sale as is attempted to be regulated, even though it might constitute a preference under the bankruptcy law," but the contrary has been held in three states.10 11 The phrase "stock of merchandise" seems to require and has received but little construction. It seems clear, however, that it does not include either raw material, or the finished product of a manufacturer who is accustomed to sell in large quantities, even to the extent of at times disposing of all stock on hand.11 The Act provides that unless its requirements are met the sale shall be "void" as against the creditors of the seller. In this respect it differs from many of the measures adopted by other states. A variety of expressions have been made use of by different legislatures and assemblies. "Presumed fraudulent," "Presumed void," and "Presumed fraudulent and void" seem to be the favorites. Such language has generally, but not always, been held to create merely a rebuttable presumption capable of being overcome by evidence of good faith in fact. It is said to prescribe a rule of evi (8) Terrell v. Young, 152 S. W. (Tex.) 671. (9) Sampson v. Brandon, 56 S. E. (Ga.) 488; Jaques v. Carstarphen, 62 S. E. (Ga.) 82; Gallus v. Elmer, 78 N. E. (Mass.) 772. (10) Peterson v. Doak, 86 Pac. (Wash.) 663; Baumeister v. Fink, 135 Ill. App. 511; Schumacker v. Riddle, 52 Pa. Super. Ct. 6. (11) Stone Co. v. Lewis, 85 Atl. (Conn.) 534; Hart v. Brierly, 76 N. E. (Mass.) 286; Cooney v. Sweat, 66 S. E. (Ga.) 257; Lee v. Gillen, 134 N. W. (Neb.) 278. dence only, and shifts the burden to him who claims the transaction to be bona fide. Such legislation so construed would seem to add very little to previously ex-. isting law, as under the statute of Elizabeth a sale in bulk was a badge of fraud. A large number of states, however, have declared such sales to be "void" or "fraudulent and void," or "conclusively presumed to be fraudulent and void." In one or two instances these expressions have been held insufficient to warrant the setting aside of a sale if it were in fact made in good faith, but it would seem that the weight of authority and the better reasoning maintain the view that evidence of good faith will not be admitted in support of such a transaction. omission from our law of the word "fraudulent" may be significant in determining the remedies available to the creditor. The A variety of situations have called for discussion as to what is intended by "creditors." It would appear that he need not be one who has sold goods constituting a part of the stock at the time of transfer, or at any time,12 or that he be a mercantile creditor.13 An obligee in an appeal bond, though liability was not determined at the time of the sale, has been held to be a creditor and entitled to notice.1 Creditors as against whom the sale is void must be the same creditors to whom notice must be given, and in determining who are within that classification it has been held that where a merchant operated a drug store as a separate institution, and across the street from his other mercantile establishment, its sale in bulk required notice to all of his creditors.15 It was held in Washington that upon a sale of a stock owned by a partnership, the individual creditors of the mem (12) Galbraith v. Bank, 130 Pac. (Okla.) 541. (13) Rabolsky v. Levenson, 108 N. E. (Mass.) 1050; Eklund v. Hopkins, 78 Pac. (Wash.) 787; Bank v. Van Allsburg, 131 N. W. (Mich.) 101. (14) Hanna v. Hurley, 127 N. W. (Mich.) 710. (15) Young v. Lemieux, 65 Atl. (Conn.) 436. bers of the firm need not be notified, 16 but the contrary was held in Tennessee.17 The law requires the purchaser to receive and the seller to furnish a complete list of creditors, certified under oath to be correct. It has been held that recitals in an affidavit that the stock is free from debt, or free and clear of encumbrance is not sufficient. If the seller in fact owes no debts, the affidavit should state that there are no creditors.18 The omission of the name of one creditor does not render the vulnerable transaction to attack creditors who were notified,19 but the one omitted may invoke the benefit of the law whether the omission was due to mistake or actual fraud.20 It has been held that contract of sale made in violation of the law cannot be enforced by either party,21 and that a purchaser may rescind for the seller's false statement that he owes no debts.22 It is said in one case that the purchaser is not a warrantor of the correctness of the list furnished by the seller, and that if he notifies all the persons named therein is protected.23 ably delayed. With just as good reason it might be urged, perhaps, that this rule would give a New York creditor very little time to act if it were a Kansas sale, and a Kansas City creditor would have an immense advantage in time over creditors more remotely situated. Perhaps the most perplexing question to be encountered in applying this law is what remedies, if any, are available to the creditor. It is a matter of disappointment that so little enlightenment may be had from It is believed that cases so far decided. by it was quite generally understood by those. actively interested in procuring the passage of the bill, and very likely by some lawyers also, that the act itself afforded grounds for attachment upon its violation. At least one wholesale concern, evidently acting upon this assumption, attached a large stock of goods, and now finds itself the defendant in a substantial damage suit. The district court vacated the attachment upon the theory that the Bulk Sales Law did not afford grounds for attachment, and that there was no evidence that any of the usual grounds for attachment existed. This would seem to be the law. The act does not purport to create any lien on the goods upon the happening of any contingency, nor does it prescribe any procedure, or confer any new or additional rights. At most, it seems to relieve the creditor of the burden of proving the sale void, if the provisions of the law are not followed."5 The New York courts say that fraud warranting an attachment must be actual and intentional, and not statutory or constructive fraud; hence an attachment is not supported alone by showing a violation of the Bulk Sales Law.28 Seven days' notice is required. It was held in Georgia that the time commenced to run when the letter was deposited in the post office for transmission, and was not postponed until its actual receipt by the creditor.24 It was argued that a creditor might be absent from home, or a resident of a foreign country, or so remotely located that weeks would elapse before he could be reached, and that a consummation of the sale would thereby be unduly and unreason (16) Whitehouse v. Nelson, 86 Pac. (Wash.) .174. (17) Mahoney v. Sams, 159 S. W. (Tenn.) 1094. (18) Interstate Co. v. Windham, 131 N. W. (Mich.) 102; Joplin Supply Co. v. Smith, 167 S. W. (Mo.) 649. 25 |