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intoxicating liquors, stored for private use, from one residence to another by the owner is not prohibited by the Act and, in fact, is actually permitted by the regulations of the Commission of Internal Revenue which authorizes the issuance of permits for the transportation of liquors from one permanent residence of an owner to another in case of his removal, although no such transfer is in terms provided for by the act.

The Court suggests that the Regulations of the Commissioner of Internal Revenue be amended to include the case of liquor stored in warehouses and declares that "clearly there is administrative power under the Act to so regulate the transfer of such stored liquors from a warehouse, to the dwelling of the owner as to prevent their being used to evade the prohibitions of the act or substantially to interfere with its effective enforcement."

The effect of this decision seems to be this: First, that there is no prohibition in the Act against the storage of liquors for strictly private use where such liquors were lawfully acquired; second, that such liquors may be transported not only from one residence of the owner to another residence but from any place of storage to the residence or dwelling place of the owner for private purposes; Third, that as a corollary to these two propositions, such liquors can be lawfully transported from one place of storage to another as from club lockers to residence or from residence or warehouse to club lockers provided always the liquors so stored, or transported, have been lawfully acquired and are intended for the private use of the owner and his friends.

The fear that this decision will make more difficult the enforcement of the Volstead Act is hardly justified, since, as the Court admits, the unexplained possession of intoxicating liquors by one not legally. permitted to possess liquor under Section 33 of the Acts still makes out a prima facie case for the government and throws the burden of proof upon the defendant in such

cases to justify his possession. How this presumption may be rebutted and the burden of proof shifted again upon the state is indicated by the Court when it declares that "if that presumption should be rebutted by appropriate testimony (as it is in this case by admissions) that the liquor to which it is applied is not being kept for the purpose of sale, barter, exchange, furnishing or otherwise disposing of it in violation of the provisions of the title, the implication is plain that the possession should be considered not unlawful, even though it be by a person 'not legally permitted' that is, by a person not holding a technical permit to possess it, such as is provided for in the act."

NOTES OF IMPORTANT DECISIONS.

SUFFICIENCY OF PROOF OF THEFT TO RECOVER ON THEFT POLICY.-An interesting decision on what constitutes a prima facie case in actions to recover on theft policies is that of Miller v. New Amsterdam Casualty Co., 110 Atl. Rep. 810.

In that case the facts showed that the theft policy sued upon covered a valuable necklace, owned by the plaintiff, which was kept in a bag back of a picture frame in his wife's room. Two weeks before the disappearance of the necklace the plaintiff had employed a new maid servant who on the morning after the loss was discovered suddenly left her employment. The maid had access to the wife's room and even entertained her "friends" in that room. A thorough search having been made of the premises without result, the plaintiff claimed the benefits under his theft policy on the theory that the necklace had been stolen.

The defendant company demurred to the plaintiff's evidence, contending that he had not met the burden resting on every plaintiff in a suit on a theft policy to prove the fact of the theft as a condition precedent to defendant's liability under the policy. The Court of Appeals of New Jersey, in sustaining the trial court's judgment in overruling the demurrer, said:

"The situation produced by the evidence evinced by a process of elimination, in an atmosphere permeated with criminal suspicion,

points inductively to one rational conclusion which the average mind draws intuitively by a process of reason akin to the inductive processes of the logician, and not dissimilar to the intuitive methods of mental and moral philosophy, which processes are recognized in jurisprudence as a sufficient basis for judicial determination, the distinct inquiry being, as Prof. Greenleaf observes, not whether it is possible that such testimony may be false, 'but whether there is sufficient probability of its truth.' 1 Greenleaf 4. We think, therefore, the facts thus adduced upon the principles of evidence to which we have adverted present a basis from which a rational mind, in the light of everyday experience (the credibility of the witnesses being conceded), might legitimately and logically infer that the jewels had been removed from the plaintiff's possession by theft."

The question of circumstantial evidence and of remote inferences have always troubled the courts in determining whether such evidence was relevant at all or if relevant how far it should be corroborated to make out a prima facie case. There can be no doubt, that the rule supported by the great weight of authority requires the plaintiff suing on a theft policy to prove the theft. How clearly must the theft be proven? Certainly not as it would have to be proven in a criminal case-beyond a reasonable doubt. On the other hand, can it be proved by mere remote inferences as the court holds in the principal case? Is the theft proven by the unexplained loss of the article? This, of course, could not be allowed as it is loss by theft that is insured against. But unexplained loss plus corroborating cir cumstances raising a reasonable suspicion of theft is and ought to be sufficient to recover under a theft policy. A loss of a diamond necklace with proof of the fact that a window had been opened the night before or that strange footprints had been seen on newlyfallen snow under the window of the room where the necklace was kept or that a servant who had access to the room suddenly leaves without explanation after loss is discovered; these are corroborating circumstantial facts which raise what are known as presumptions of fact which have the effect of supplying sufficient proof to make out a prima facie case. Speaking of these presumptions of fact or socalled natural presumptions, Prof. Greenleaf in his work on Evidence (Vol. I, 44) has the following to say:

"They depend upon their own natural force and efficacy in generating belief or conviction in the mind, as derived from those connections which are shown by experience, irrespective of any legal relations. *** These merely natural presumptions are derived wholly and directly from the circumstances of the particular case

by means of the common experience of mankind, without the aid or control of any rules of law whatever."

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CARE REQUIRED OF TRUSTEES IN INVESTING TRUST FUNDS.-There are rules for determining the liability of trustees for making unwise investments of trust funds. One is the Massachusetts rule which is based on the good faith of the trustee and seeks to put no other restriction on the character or form of the investment. Under this rule corporation stocks are held to be as safe for investment as government bonds. Harvard College v. Amory, 9 Pick. 446; Dickinson's Case, 152 Mass. 184, 25 N. E. 99, 9 L. R. A. 279. The New York rule holds the trustee to a prudence greater than that used by men in handling their own funds and strictly forbids all investments of a speculative character or those subject to "sudden and uncertain changes in the market." Under this rule no "hazard" may be taken and it is generally held the trustee is limited to public securities, bonds and mortgages. King v. Talbot, 40 N. Y. 76.

In a recent decision the Supreme Court of Michigan after reviewing both lines of authorities refuses to lay down any definite rule nor to say what kind of investments are inherently safe or unsafe, but prefers to leave that question open to be determined as of the time when the investment is made. In re Buhl's Estate, 178 N. W. Rep. 651. In this case a trustee was held not chargeable with a loss resulting from the depreciation of the preferred stock of a private corporation (the Farrand Organ Company) which the trustee had purchased as an investment with trust funds. In reaching this conclusion the Court said:

"A reasonable investment in dividend-paying stocks and interest-bearing bonds of a private business corporation may be permitted when the corporation has acquired, by reason of the amount of its property and the prudent management of its affairs for a considerable period of time, such a reputation for permanence and stability as to command universal confidence, and so that careful and intelligent persons, familiar with such corporations and the manner in which their business should be conducted, commonly invest their own money in them as a permanent investment, and not for the primary purpose of securing a considerable income therefrom. A trustee has not unlimited authority to invest as an ordinarily prudent man would invest his own; he must take such risks only as an ordinarily prudent man would take who is a trustee of the money of others. In making such an investment, he always assumes the risk of a searching scrutiny in a court of equity as to the diligence employed and sound judgment exercised by him in the transaction. He must always bear in mind that

the primary object of the creation of the trust is not, ordinarily, accumulation, but the preservation and perpetuity of the fund until the time for its distribution arrives, and he must make no investment by which this object may be at all likely to be defeated."

In explaining its decision the Court made it clear that it did not wish to go as far as the Massachusetts rule nor impose the same severe restrictions as the New York rule. In announcing its own position the Court, after a review of the New York and Massachusetts cases, said:

"A consideration of these decisions, and the reasoning of the judges on which they are based, leads us to hesitate about laying down any definite rule as to the class of securities in which trustees may legally invest. We are unwilling to say that such investments can only be made in government, state, or municipal bonds or loans on real estate mortgages, nor do we hold that an investment in these under all circumstances would relieve the trustee from liability in the event of loss. Neither do we say as a matter of law that investment in stocks and bonds of other corporations is always to be permitted. The variety of investments now open to the public, many of them seemingly permanent and safe, and in which so many careful and prudent men invest their own money, renders it unwise to attempt to define the securities in which such investments can be made."

The New York rule rests upon the case of King v. Talbot, supra, where it was held that investments in railroad or canal stocks was not to be permitted and would be at the peril of the trustee. The Massachusetts rule rests on the case of Harvard College v. Amory, supra, where the Court held that an investment in the stock of an insurance company was so far as the character of the investment was concerned as good as government bonds, which, by the way, at that time were not as good as Liberty Bonds are today.

In the great mass of cases which seem to range themselves on one side or the other of these two lines of authorities, there is no case that holds that the trustee is an insurer, nor .required to possess infallibility of judgment. In the absence of statute definitely defining the character of investment for trust funds the rule announced by the Michigan court appeals to us to be the soundest. All kinds of securities are subject to fluctuations. Sometimes government bonds are good investments; at other times, as after a great war, they are liable to serious depression. Under such circumstances it might be the part of wisdom for the trustee to invest in some good preferred stock of a corporation which has acquired, as the Michigan Court says, "a reputation for permanence and stability." On the other hand when public securities are stable in price and bear a fair rate

of interest and where deeds of trust on real estate of unquestioned title are at hand, such investments should be preferred. The duty of the trustee is to so invest the funds of his estate as to secure a good rate of interest consistent with the strongest possible security for the safety of the principal.

"SUBJECT TO FORMAL CONTRACT.”

In Van Laun v. Neilson Reid & Co.1 Lord Kinnear said: "Now the general rule of law is beyond all question that when parties agree that their arrangements are to be embodied in a formal written contract to be executed, there is a locus poenitentiae until the execution of that written document is completed, and either party may resile until the written instrument is duly executed." In his work on contracts Professor Gloag indicated that that statement of the law is too wide. His conclusion from the authorities is that where the acceptance meets the offer a binding contract results even though there is a stipulation that a formal contract is to be executed. His main authority for this seems to be Erskine v. Glendinning. There a written offer to take a lease was met by a general acceptance, also in writing, with the words "subject to Lease drawn out in due form." It was held that a binding contract had been concluded, and that if parties would not concur in drawing out a lease, the Court would remit to a conveyancer to draw one with the usual clauses.

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by letters have not been viewed with favor by the courts, and are not likely to be followed.

The leading English case appears to be Winn v. Bull. The defendant agreed with the plaintiff to take a lease of a house for the term of seven years, at a rent "subject to the preparation and approval of a formal contract," and it was held that there

was no final agreement of which specific performance could be enforced. Sir George Jessel said: "I take it the principle is clear. If in a case of a proposed sale or lease of an estate two persons agreed to all the terms and say, 'We will have the terms put into form' then all the terms being put into writing and agreed to, there is a contract. If two persons agree in writing that up to a certain point the terms shall be the terms of the contract, but that the minor terms shall be submitted to a so

licitor, and shall be such as are approved by him, then there is no contract, because all the terms have not been settled.

It comes, therefore, to this that where you have a proposal or agreement made in writing expressed to be subject to a formal contract being prepared, it means what it says; it is subject to and is dependent upon a formal contract being prepared. When it is not expressly stated to be subject to a formal contract it becomes a question of construction, whether the parties intended that the terms agreed upon should merely be put into form, or whether they should be subject to a new agreement the terms of which are not expressed in detail."

Again in Page v. Norfolk" the facts were -hortly as follows: By a letter dated the April 17, 1893, the plaintiffs offered the defendants £145,000 for their business, including certain freehold and leasehold property and personal estate. The letter con

(4) 7 Ch. Div. 29. (5) 70 L. T. Rep. 781.

tained the following condition: "This offer is made subject to our approving a detailed contract to be entered into." The letter also mentioned the date for completion, and referred to the payment of the purchase money in cash, and preference and debenture stock of a brewery company, to be formed. The defendants accepted the terms contained in the letter by signing it. They also had the letter stamped as an agreement. Subsequently they refused to complete. No company was ever formed. An action was brought by the plaintiffs for specific performance. It was held by the Court of Appeal (affirming the judgment of Mr. Justice Romer, as he then was) that there was no binding contract between the parties, because not only was it expressed on the face of the letter to be made subject to the parties "approving a detailed contract to be entered into," but also because it was evident that various important details were left to be discussed, and agreed on, matters

that could not be settled without a further document.

In Von Hatzfelt-Wildenburg v. Alexander an alleged contract for the sale of a leasehold house, contained in letters wherein it was stipulated by the purchaser that her acceptance was subject to, amongst others, a condition that her solicitors should "approve the title to, and covenants contained in, the lease the title from the freeholder, and the form of contract," it was held by Mr. Justice Parker (as he then was) that there was no complete contract, susceptible of being enforced by way of specific performance. His Lordship summarized the position as follows: "It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplates the execution of a further contract between the parties, it is a question of construction whether the exe

(6) 1912, 1 Ch. 284.

cution of the further contract is a condition or term of the bargain, or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract, either because the condition is unfulfilled, or because the law does not recognize a contract to enter into a contract. In the latter case there is a binding contract, and the reference to the more formal docu

ment may be ignored. The fact that the reference to the more formal document is in words, which according to their natural construction, import a condition, is generally, if not invariably, conclusive against the reference being treated as the expression of a mere desire.

The latest decision on the point is that of Mr. Justice Russell in Rossdale v. Denny' where the intending purchaser's letter offering £75,000 for certain household property, contained the following clause: "I am prepared to pay £75,000 deposit on signing the formal contract, completion to take place fourteen days after you are in a position to give vacant possession. This offer is subject to formal contract, to embody such reasonable provisions as my solicitors may approve, and the lease containing no unusual provisions or covenants.' The vendor's agent replied on the same date: "In reply to your letter of even date, I am instructed to accept, on behalf of my client D., the offer therein contained, and I will communicate with D. direct so that he can instruct his solicitors to prepare formal contract." It was held that the offer in the intending purchaser's letter was conditional on the signing of a formal contract. The result of these English decisions is, thus, clearly the same as that stated by Lord Kinnear.

Glasgow, Scotland.

DONALD MACKAY.

(7) 1920, 149 L. T. J. 528.

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CONTROL OF COAL MINES BY THE STATE-IS IT THE OPENING WEDGE OF STATE SOCIAL ISM?

The sure but steady growth of soci alistic theories and propaganda in my own state of Alabama is very clearly shown by the indifference with which the public has received the legislation proposed by the coal commission appointed by Governor Kilby. Yet the proposed legislation, if enacted, would vitally and permanently affect the destiny of this district, working a revolution in an industry which is the very foundation of our indus trial wealth and progress.

The proposed legislation marks the first effort made in Alabama to embark our commonwealth upon a policy of state socialism. It proposes for the state to take over all the coal mines in Alabama, and to operate and control them by a state commission-a commission that will exercise powers as plenary as the state would exercise if it had legally acquired ownership of these properties. The commission can fix the wages of labor, the prices of coal, control its distribution and make rules and regulations as summary and binding as could be made by the most autocratic power.

The proposed legislation brings us face to face with a new and startling theory of government-a conception of its functions and powers subversive of our constitutional standards and ideals. This new theory of state socialism is that the will of the people is absolute and unlimited, and that the individual citizen pos sesses no inherent or inalienable rights of person or property which a government should protect or respect. If it is property which in the judgment of the legislature is affected with a public interest, then the state can without restraint dispossess those who by management, initiative, industry and sacrifice have acquired its owner

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