the old business (Churton v. Douglas, Johns. 174, at 191), or to deal with his old customers (Leggott v. Barrett, 15 Ch. Div. 306). That the vendee's right cannot be protected to the full, is no reason in the eyes of the court for not extending protection as far as these authorities will allow.

The American decisions on this point are few, but emphatically opposed to the conclusion reached in Trego v. Hunt. The courts take the ground that it is the vendor, not the purchaser, who should have protection. The vendor has sold the advantage of an established business. It is only fair that he should be given every opportunity to compete on an equal footing with the purchaser. Goodwill, to be sure, is the probability of retaining the concern's customers; but it is a probability which the vendor may diminish by the exercise of certain unquestioned rights. What consistency is there in allowing the vendor to enter into the same kind of business, and to solicit trade publicly, and yet barring him from his most effective means of competing successfully, namely, the solicitation of his old customers? This is the attitude of the American courts. (Williams v. Farrand, 68 Mich. 473; Cottrell v. Babcock &c. Mfg. Co., 54 Conn. 122; Close v. Flesher, 28 N. Y. Supp. 736.)

After all, is it not a question of original definition? Are not the courts, under the guise of deducing conclusions from accepted definitions, in reality defining anew the nature of goodwill? As goodwill is conceived of, on the one hand, as the chance of keeping the old customers subject to unlimited competition on the part of the vendor, or, on the other, as that chance free from such competition, so will the vendor be allowed or denied the right to solicit his old customers. And perhaps the English view of the scope of goodwill is the more just. Eighty years ago, ViceChancellor Plumer said: "A person, not a lawyer, would not imagine when the goodwill and trade of a retail shop was sold, the vendor might, the next day set up a shop within a few doors and draw off all the customers. The goodwill of such a shop in good faith and understanding must mean all the benefit of the trade, and not merely a benefit of which the vendor might deprive him the next day." (Harrison v. Gardner, 2 Mad. 198, at 219.) Yet mainly because of a strong aversion to the enforcement of any contract in restraint of trade that was not to be found in express words, the courts declined to adopt the lay conception of goodwill so vigorously approved by the Vice-Chancellor. Is not the decision in Trego v. Hunt commendable in that, as far as it is possible, it does adopt the view, then and now prevalent outside the courts, as to what constitutes fair business dealing? It certainly clothes that shadowy, intangible property, goodwill, stripped of wellnigh all its virtue by unfriendly decisions, with a little substance.

There is one seeming inconsistency in the law on this point as laid down to-day in the English courts. Solicitation of customers when the business is voluntarily sold is restrained; solicitation after the business is compulsorily sold in bankruptcy proceedings is not restrained. (Walker v. Mottram, 19 Ch. Div. 355.) On what principle can goodwill mean one thing when a man disposes of his business voluntarily, and another when his business is sold out by his assignees in bankruptcy?

MONEY PAID ON A BILL BEARING A FORGED INDORSEMENT. Does the drawee who pays a bill with a forged indorsement upon it have to bear the loss? Is the familiar doctrine of Price v. Neal properly extended to

such cases? Is there no fundamental distinction between a forged indorsement and a forged drawing as affecting the rights between the drawee and the innocent indorsee to whom he has paid the bill? In The London & River Plate Bank v. The Bank of Liverpool, [1896] 1 Q. B. 7, Mathew, J. rests the two cases on the same grounds, and decides that the drawee who pays the innocent indorsee of a bill bearing a forged indorsement cannot recover back the money, on the principle that the payment by the drawee has caused the indorsee to lose his rights against prior indorsers. Undoubtedly the defendant can no longer charge prior parties as indorsers, as the time for notice of dishonor has gone by, but his rights on the warranty, implied in the sale of any chattel, remain unimpaired (2 Ames, Cases on Bills and Notes, 242, n. 1), and it is doubtful if it is of itself any defence to one who has received money under a mistake of fact, there having been a total failure of consideration, that his rights against other parties have been changed or his relations in respect to them altered. Bobbitt v. Pinkett, L. R. 1 Ex. Div. 368; Canal Bank v. Bank of Albany, 1 Hill, 291; Rheel v. Hicks, 25 N. Y. 289; Koonzt v. Central National Bank, 51 Mo. 275. It is said further, that "no single case has been produced in which, where payment has been made on a forged indorsement to the holder of it in good faith, the money has been recovered back." It is rather unfortunate that in so important a case the attention of the court was not called to Bobbett v. Pinkett, supra, a decision which is very difficult to reconcile with the principal case. The American cases in which such recovery has been allowed are collected in I Ames, Cases on Bills and Notes, 433, n. 2.

In Price v. Neal, 3 Burr. 1354, it will be remembered that it was the drawer's name that was forged, and it was held that the drawee, having paid an innocent indorsee, must himself bear the loss. But the distinction between such a case and one where an indorsement is forged is obviously that in the latter case the indorsee has never obtained legal title to the instrument, and, however innocent he may be, he is immediately liable at law to the true owner for the conversion. This principle is expressly recognized in Bobbett v. Pinkett, supra. If, as in the principal case, the drawee has paid the true owner, it would seem that the drawee should be subrogated to his rights and be enabled to compel the indorsee to account for the money received to his use. The whole subject is elaborately discussed in 4 HARVARD LAW REVIEW, 297.

It is to be hoped that the solution of a question of so much importance will not be left to depend on the authority of a single justice of the divisional court, but that the case will be carried up to the higher courts.

THE 66 TRUST FUND THEORY. In the late case of Adams & Westlake v. Deyette (65 N. W. Rep. 471), the Supreme Court of South Dakota rests its decision on the ground" that the assets of a corporation are a trust fund for its creditors." On this theory a judgment confessed by a corporation for money due on an executed ultra vires contract, admitted to give a right of action for the sum recovered, was set aside as a preference of creditors. The "trust fund" doctrine seems to owe its origin to a decision by Judge Story in 1824, in the case of Wood v. Dummer (3 Mas. 308). Since that decision it has been alternately applied and rejected by courts and eulogized and condemned by text writers. Within the last two years Judge Thompson has characterized it as "the only doctrine worthy

of respect," and the Supreme Courts of Indiana, North Carolina, and Alabama have distinctly repudiated it, the latter overruling a number of cases where its existence had been recognized. See 5 Thompson on Corporations, 5115; Bank of Crawfordsville v. Dovetail &c. Co., 40 N. E. Rep. 810 (Ind.); Thomson-Houston Co. v. Henderson Co., 21 S. E. Rep. 951 (N. C.); Jewelry Co. v. Volfer, 17 So. Rep. 525 (Ala.).

Just what the doctrine is, even those who uphold it do not seem to know. It seems to be an accommodating judicial ignis fatuus, which is present or absent as courts seem to require. No court has been able to describe it exactly or to define its limits. It is admitted that there is no trust in the strict sense of the term. But these admissions tend to still greater confusion. The logical conclusion of holding that there was a strict trust would be that the creditor of an insolvent corporation could not enforce his claim at law. When this argument was pressed on the court in Gottlieb v. Miller (154 Ill. 44), they qualified their previous statement by holding that there was a "quasi trust" only. The United States Supreme Court has long been committed to the "trust fund" doctrine, yet in the recent case of Hollins v. Brierfield &c. Co. (150 U. S. 371) Justice Brewer practically admits that the expression is figurative; and Justice Bradley, in Graham v. R. R. Co. (102 U. S. 148), while upholding the doctrine, is forced to acknowedge that "if pushed to its logical conclusion, it would lead to results not to be tolerated," and yet he does not seem able to define the limits within which it will be tolerated.

This general haziness that surrounds the whole doctrine leaves the student in a confused state of uncertainty as to what the doctrine really is. Mr. Pepper, however, in a recent able article (2 Am. Law. Reg. & Rev., N. S. 448), clears up much of this uncertainty. He deprecates the use of the expression "trust fund" as a misleading misnomer, and suggests that the courts have used it as a cover for judicial legislation. The cases seem to justify this view, and it must be admitted that justice often demands legislation by the courts in dealing with insolvent corporations.

RECENT CASES.

ADMIRALTY - RECOVERY FOR DEATH BY WRONGFUL ACT. - Where a State statute gives the personal representative of one killed by the negligent handling of a vessel a right of action, and makes any damages that may be recovered a lien upon such vessel, held, a suit may be maintained in the Federal courts to enforce such right of action. The Willamette, 70 Fed. Rep. 874.

It has been frequently argued that there can be no recovery in suits of this kind, on the ground that there is no action given by general maritime law, and it is not competent for a State to alter this. But statutes giving a recovery exist in some thirty States, and their validity has been upheld in Sherlock v. Alling, 93 U. S. 99. An elaborate review of the authorities is found in The City of Norwalk, 55 Fed. Rep. 98.

BILLS AND NOTES - FICTITIOUS PAYEE. A clerk of the plaintiffs represented to them that they were indebted to B., and they drew a check to the order of B. in payment. There was no such person as B., and the clerk indorsed the check to the defendant, a bona fide purchaser, who received payment from the bank. In an action for the money, it was held, that the check was payable to bearer, and there could be no recovery against the defendant, a holder in due course. Clutton v. Attenborough, [1895] 2 Q. B. 707.

This affirms the judgment of Wills, J., [1895] 2 Q. B. 306. The Bills of Exchange Act, 1882, provides that where the payee is fictitious the bill may be treated as payable

to bearer, and perhaps as a question of construction the decision above is correct. The case of Bank of England v. Vagliano Bros., [1891] App. Cas. 107, on which the court rely chiefly, should be distinguished, however. It is the intention of the drawer, and not that of the acceptor, which governs, and hence, apart from the statute, the Vagliano case would seem to be right and the principal case wrong. The correct result was reached in Shipman v. Bank, 126 N. Y. 318, and in Armstrong v. Bank, 46 Oh. St. 512. See Kohn v. Watkins, 26 Kan. 691, contra; and so in the case of the making of a note; Ort v. Fowler, 31 Kan. 478, and Bank v. Rowan, 14 N. S. W. L. R. 127.

BILLS AND NOTES FORGED INDORSEMENT. — The innocent indorsee of a bill bearing a forged indorsement received the amount of the bill at maturity from the drawee, who, having paid the bill again to the true owner, seeks to recover back the money paid to the bona fide holder. Held, the drawee cannot recover. The London River Plate Bank v. The Bank of Liverpool, [1896 ] 1 Q. B. 7. See NOTES.

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BILLS AND NOTES - VENDOR'S LIEN PAYMENT BY INDORser. Held, where A. held two notes of the same date secured by a vendor's lien, and the one first due was dishonored and taken up by an endorser, and then transferred without A.'s knowledge, the lien on this note was postponed to that on the one still held by A. Goddard v. Peeples, 33 S. W. Rep. 314 (Tex.).

The two liens should have been held co-ordinate. If the maker of the note had paid it and then sent it out again, the decision of the court would of course be sound. Union Trust Co. v. R. R. Co., 63 N. Y. 311.

CARRIERS LIABILITY ON BILL OF LADING. The defendant company, on receipt of certain grain, issued a bill of lading in one part, and also two duplicates of this original. On the original there was no mention of any other bill, nor any clause "this being accomplished the others to stand void." The plaintiffs were pledgees of the original bill of lading. The defendants delivered the grain to the original shipper on his presenting one of the duplicate bills. The plaintiffs then brought this action against the defendant company. Held, that the railway company was liable on its bill of lading. Midland Nat. Bank v. Missouri Pacific Ry. Co., 33 S. W. Rep. 521 (Mo.).

This is an admirable decision. A carrier issuing bills of lading in this form binds himself to deliver to its holder, and any other delivery is made at the risk of being unable to fulfil his contract and becoming liable therefor. Bills of lading in this form do not seem to have been the subject of litigation before this case. In Forbes v. Boston

Lowell Ry. Co., 133 Mass. 154, the carrier was held liable to the holder of a bill of lading for the mis-delivery of certain corn. On the other hand, local custom was held sufficient excuse for giving up certain wheat without presentation of the bill. This is not so clear. In the principal case the court rightly held the duplicates to be mere memoranda, and of no more effect than memoranda.

CONSTITUTIONAL LAW EMINENT DOMAIN-PUBLIC SERVITUDE. A citizen of Mississippi sought to enjoin the construction of a levee across his plantation, situated upon a navigable river in Louisiana. Defendants justified under a legislative act. Held, by the substantive law of Louisiana, plaintiff's land, and all similarly situated, is held subject to a right in the State to take any part needed for levees, without compensation. Eldridge v. Trezevant, 16 Sup. Ct. 345

The Supreme Court of Louisiana has frequently followed this rule, although the Constitution of that State (Art. 156) forbids a public taking of private property without compensation. The Supreme Court of the United States thought that plaintiff could not invoke the Fourteenth Amendment, which is satisfied if the State law is impartially administered, here admittedly the fact. Previous cases have arisen under grants by France and Spain; the present case concerned land granted by the United States, but the rule was applied, the court thinking the matter settled by the decisions that the extent of riparian titles to land upon navigable non-tidal rivers, though granted by the United States, depended upon the law of the State in which such land is situated. It thought that the same cases decided that land granted by the United States is subject to local regulations applicable to land held under State grant; also that the Fourteenth Amendment does not apply to servitudes, held by the State courts to be valid. It is doubtful whether any of the cases cited go, in terms, to the extent of the part of the proposition last stated, though the decision seems correct. For a full discussion of the general subject, see Shively v. Bowlby, 152 U. S. 1. Peart v. Meeker, 45 La. Ann. 421, is a recent case under the Louisiana rule.

CONSTITUTIONAL LAW-LICENSES - PEDDLERS. A statute providing that city and town authorities "may issue a license to such persons as they find proper persons to engage in a temporary or transient business... for the sale of goods, wares, and merchandise," for certain fees, and making it a misdemeanor to engage in such business

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without a license, was held unconstitutional, since it gives officers power to exercise an arbitrary discretion in granting licenses. State v. Conlon, 33 Atl. Rep. 519 (Conn.). A very forcible argument might be made that the context indicates that the words 'may issue a license" should be construed "shall issue a license"; and that the words "such persons as he finds proper" vest in the officer not an arbitrary discretion, but a discretion which he is bound to exercise honestly and reasonably, for the purpose of effectuating the intention of the statute. State v. Yopp, 97 N. C. 477; Singer v. Maryland, 72 Md. 464; Comm. v. Parks, 155 Mass. 531. The act would thus be preserved, and the rights of those against whom it was directed would be sufficiently protected, since, if the officer abused his power by exercising an arbitrary discretion, his act would be unconstitutional and invalid. Yick Wo v. Hopkins, 118 U. S. 356. However, words less strong than those in the principal case have been held to confer an arbitrary discretion. Mayor of Baltimore v. Radecke, 49 Md. 217; State v. Dering, 84 Wis. 585. It is to be noticed that those are cases of city ordinances, and might be supported on the ground that the legislature does not give a city the right to make unreasonable ordinances, and the ordinances in question afford such an opportunity for unreasonable action on the part of the officers as to make them unreasonable ordinances.

CONSTITUTIONAL LAW-SEIZURE OF PRIVATE PROPERTY AS CRIMINAL EVIDENCE. A steam boiler exploded on plaintiff's premises, killing thirty-seven persons. The engineer was indicted for criminal negligence, and ten days after the accident the court ordered the boiler and engine into the custody of the police, not to be removed from the premises, to be used as evidence against the engineer in the pending trial. Plaintiff applied for a writ of mandamus to vacate this order, as an unwarrantable interference with his rights of property. Held, such an order directed against private property of this character belonging to an innocent party was an unreasonable seizure of goods, and unconstitutional. McGrath, C. J., dissenting on the point of unreasonableness. Newberry v. Carpenter, 65 N. W. Rep. 530 (Mich.).

No reported case seems to have gone to the length of sustaining a seizure like the present. Most of the instances where personal property belonging to a third party has been held as evidence by public officers have been cases of stolen property, tools, and coin used in counterfeiting, gaming apparatus, etc. In the principal case it was perfectly possible to preserve evidence of the condition of the boiler without depriving the owner of its use, and the attempted seizure seems plainly unreasonable.

CONTRACTS - PUBLIC POLICY-DEFENCE. Held, that where a contract is not in general restraint of trade according to the rule in The Diamond Match Co. Case, 106 N. Y. 473, a defendant who retains the consideration for his promise cannot set up as a defence that his contract is part of a conspiracy to raise prices and lower wages. National Wall Paper Co. v. Hobbs, 35 N. Y. Supp. 932.

It would seem that where a contract is shown to be part of a general scheme to lessen competition, the court should not aid either party in enforcing it. Illegality should be a perfect defence to an action on a contract. Emery v. Ohio Candle Co., 47 Ohio St. 320; 68 N. Y. 558, 566.

CONTRACTS - SALVAGE FRAUDULENT CONCEALMENT COMPENSATION. Α salvage contract was entered into between the master of a tug and the master of a disabled steamer, the former suppressing the fact that the owners of the steamer had already employed another tug to tow the steamer to her destination. Held: (1) the contract must be set aside on account of fraud; (2) the master of the tug is entitled to recover the amount by which the steamer was found to have been actually benefited by comparing the expense actually incurred with that which would have attended a towage by the tug engaged by the owners. Goff, Circuit Judge, dissenting on second point. The Clandeboye, 70 Fed. Rep. 631.

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The rule invoked, that if the sources of knowledge of material facts are exclusively within the possession of one of the contracting parties there is a duty to disclose (2 Kent, *482), would seem to be included within Bigelow's broader proposition, that "a duty to speak . . . arises wherever and only where silence can be considered as having an active property, that of misleading." I Bigelow on Fraud, 597. As to the right to recover compensation, there is a strong analogy to cases where a conveyance of land has been obtained by the fraud of the buyer; there the seller may have a reconveyance, but is obliged to pay back the consideration money and sums laid out in improvements. Kerr, Fraud and Mistake, 2d ed., 373. One rescinding on account of fraud must put the other party in the same position, as far as possible, as he was in the beginning.

CORPORATIONS-FEDERAL JURISDICTION COLLUSIVE CONVEYANCE. - X, a Virginia corporation, claimed to own land in Virginia which was in possession of defendant. For the purpose of trying the claim in the Federal Court, the stockholders of X