Central Law Journal. ST. LOUIS, MO., OCTOBER 13, 1916. THE LEASING CLAUSE IN THE CLAYTON Section 3 of the Clayton Anti-Trust Act declares it to be unlawful for any person engaged in commerce to lease, etc., any goods, etc., for use in the United States on the condition that lessee shall not use or deal in the goods of a competitor of lessor, where such condition. may substantially lessen competition or tend to create a monopoly. This section, so far as it applied to leases, was claimed to be unconstitutional, as leases are not commerce. United States v. United Shoe Machinery Co., 234 Fed. 127. Trieber, District Judge, as to this objection, said: "It may be conceded that every lease is not commerce, but that is not conclusive that none may be. Each case must be determined from the peculiar facts shown to exist in that case. When a corporation with millions of capital, doing an annual business amounting to millions of dollars, sees proper to conduct its business by only leasing its chattels instead of selling them, why is it not as much engaged in commerce as if it sold them outright?" This is not a very satisfactory answer to a legal objection. But the court goes on to refer to decisions upholding the White Slave Act as authority. But are those cases very close? This question seems to us more closely related to necessary reasoning to sustain the Child Labor Law. other goods in the course of transportation could be injuriously affected by those produced by child labor, as they could not be said to be unsanitary. Even, however, should the Child Labor Law be sustained, the decision might not cover the lease clause in the Clayton Act, and we might be forced to look to consequences of such clauses in the states where they are intended to have effect. Then also we have to say that the existence of such clauses in states generally tends to create a monopoly, not in trade, but in their reflex effect on shipments in trade. We know that for a very long time insurance companies have been trying to get under the commerce clause, but the Supreme Court has held that policies were merely contracts as are other contracts. Is not a lease a contract, like The strict logic of any other contract? things would seem to lead to this result, but questions under the commerce clause than theoretical. If a sale for shipment in interstate commerce with such a condition as above stated can be forbidden, because a condition annexed thereto tends to create a monopoly, it would seem very difficult, indeed, to say a mere arrangement for passing possession of a chattel might not be condemned for the same reason. are more practical We have always understood that, strictly, interstate commerce concerns transportation therein, but opinions sustaining the Sherman Act have carried us past that point, and we must now admit that commerce may be controlled so as to prevent monopoly as to articles shipped therein. If the shipment is of articles sold, it would seem the same as to shipment of articles In the White Slave Law there could leased. In neither case does anti-trust legisbe consideration of morality being aflation take hold because of the contract of fected in the state to which a woman is being transported. In the Child Labor Law the morality of another State than where child labor is permitted could not be hurt. Nor might it be alleged that sale or lease, but solely because of commerce between the states being used in the enforcement of a condition that may work for monopoly. Facilities that are controlled only by Congress may by it be against other creditors of the debtor. The prevented from being perverted to private, as against public, interest. Taking right of the debtor to prefer one set of creditors these facilities out of the reach of states was not designed to allow their being operated to state injury. NOTES OF IMPORTANT DECISIONS. GARNISHMENT MONEY VESTED IN TRUSTEE BY AGREEMENT BETWEEN MORTGAGOR AND MORTGAGEES.-In Minneapolis Threshing M. Co. v. Calhoun, 159 N. W. 127, decided by Supreme Court of South Dakota, it appears that by consent of mortgagees the mortgagor conveyed to a trustee mortgaged property to sell at public auction and divide the proceeds between the mortgagees, accounting to mortgagor for any surplus. The property being sold, plaintiff in judgment garnished the trustee, claiming the entire sum in his hands. It was contended that this agreement merely substituted the personal promise of the mortgagor for the lien which was released by the mortgagees and made such proceeds subject to garnishment issued upon plaintiff's judg ment. The court said: "But in this case the mortgagees did not consent that the mortgagor might sell the mortgaged property and apply the proceeds of the sale on the mortgaged debt. The consent to the sale was given upon the express condition that the property was to be advertised and sold at auction; that the proceeds of the sale were to be collected by Pettigrew and applied by him in payment of the mortgage debts. This arrangement amounted to the creation of an express trust and the proceeds became a trust fund in the hands of Pettigrew. Pettigrew's authority could not be revoked by the mortgagor, nor had the mortgagor any right to or control over the proceeds of the sale, except as to any surplus there might be over and above the amount of the indebtedness secured by such mortgages." A concurring opinion says: "The real question is, whether an agreement between a debtor and his creditors that a certain specified portion of his property shall be placed in the hands of a trustee to be converted into money in a manner not fraudulent as to other creditors, and the money so realized applied in payment of debts actually due and owing is valid as being conceded, such a mode of making payment in good faith and without any fraudulent intent is valid." We are rather disposed in favor of the latter statement than the former. This was a disposition for a valuable consideration by way of preference of one creditor over another, and the fact that the creditors were mortgagees becomes merely an incidental circumstance. The arrangement could embrace other creditors than mortgagees as well as mortgagees. MON LAW.-In Onondaga Gulf & C. Club, 160 N. Y. Supp. 693, decided by New York Supreme Court, the position is taken that at common law there may be enforced the principle of a maximum rate for service, but not that of an equal charge for service, and many New York cases are cited to this effect. This means, in effect, that where regulation is enforced by law, then nothing outside of the general duty to give to a particular customer service for a reasonable reward, is demandable of a public service company except it be specified by law. We may also say that according to other decision, all intendment is against such regulation-its terms being narrowly construed. Thus in Robert v. Chicago & A. R. Co., 148 Mo. App. 96, 127 S. W. 925, it was held that in a statute forbidding the giving by a carrier of a lower rate to one than another, this did not prevent the giving of a rate to go and return for less than the sum of two single fares. The theory of regulation of carriers is not precisely like that of the regulation of ports and wharves. Owners of vehicles do not use property in which there is common right, as do owners of wharves. There is no jus publicum in the former, but the right of regulation arises rather out of estoppel. But in either event the common law idea would be little suited to conditions in this day of sharp competition, when no one should have any advantage over another in the facilities furnished by public service companies. It would be like special favors more truly now the foundation of a monopoly than in common law days. It might be thought, however, that monopolies existed largely in those days, because kings encouraged them and their influence was less perceived then than now. But nothing may be thought to have given more irresistible impulse to the spirit that produced Magna Charta than the grant of special favors to a few. Hitherto the attention of the public has been chiefly fastened on the manner in which the Prize Court dealt with enemy ships and property, but now, as a perusal of the reports will plainly show, the intervention of the court is with increasing frequency invoked for the purpose of determining how neutral property which may have come into the war zone is affected by the allied powers' policing of the seas for the purposes of blockade. Consequently not a few novel and interesting matters are arising for decision, and we here propose to briefly indicate some of the more outstanding judgments of the court in this respect. One of the judgments delivered early in the war was The Miramichi,1 in which a cargo of wheat captured on the high seas en route for German consignees was released to American merchants, on its be ing proved that shipment had been made prior to the outbreak of war, and that the right of property in the cargo was still in the American consignor. That principle has been held not to apply to post bellum consignments." In such cases the fact that the legal property in the goods has not passed from the consignor does not make the capture unlawful. Capture is regarded as delivery and the goods are treated in a court of prize as enemy property, on the theory that goods on their way to the enemy with the intention of ultimately becoming his property are, as pointed out by Lord Mansfield in The Sally, in 1795, to be regarded and treated as enemy property, for such matters are no longer ruled by commercial law which is concerned only with the interests of vendor and vendee, but by the law of prize which regards primarily belligerent rights. In the case of The Hakan, where the Crown asked for condemnation of a Swed (1) 31 T. L. R. 72. (2) The Louisiana, et al., 32 T. L. R. 619. (3) 32 T. L. R. 639. ish vessel which had been captured while engaged carrying food to a German port, the president read an important judgment on the law of contraband in relation to neutral ships. After an exhaustive review of international treaties, orders and decisións, he came to the definite conclusion, that at the present day it is a rule of international law that a neutral vessel carrying contraband, which measured by value, weight, volume or freight, forms more than half the cargo, is subject to condemnation as good and lawful prize of war. The case of the Bangor is interesting as defining the law as to capture of enemy ship in neutral territorial waters. In this particular case the court was not satisfied that the capture in fact took place in neutral waters, but were willing to decide the point of law raised, on the assumption that it did. Accordingly after consideration of numerous authorities, the president was of opinion that, "no proposition in international law is clearer or more surely established than that a capture within the territorial waters of a neutral is as between enemy belligerents for all purposes rightful and that it is only by the neutral state concerned that the legal validity of the capture can be questioned;" or as one of the old judges concisely and neatly put it, "neither an enemy nor a neutral acting the part of an enemy can demand restitution of captured property on the sole ground of capture in neutral waters." In the course of his judgment, the President threw out the suggestion that it might well be that the old maritime league which for long determined the boundaries of territorial waters ought to be extended by reason of the enlarged range of guns used for shore protection. In several cases, too, interesting points. were in question as to the legal nature and effect of a trade domicile. Certain of these turned on matters of fact and need (4) 32 T. L. R. 590. not be discussed here, but The Flamenco and The Orduna are noteworthy. The property concerned was two consignments of copper on these vessels belonging to a German subject carrying on trade in Chile and shipped by him to Liverpool where they had been seized as prize. The German owner had left Chile before the seizure and appeared to have gone to Switzerland. It was held that although the country to which he had betaken himself was equally with Chile a neutral country, yet he had by leaving Chile lost the neutral trade domicile which he had acquired by residence there, and that he had thereby revested himself as an enemy, and therefore the goods were liable to condemnation. The famous order in Council issued by the British Government in March, 1915, states that merchant vessels may in certain circumstances be required to enter a British port and discharge. In The Stigstad, it was decided that where a neutral vessel had been so required, her owner had no legal right to compensation in respect of detention and consequent loss thereby incurred by him. The judgment in The Alwina, on the other hand, was in favor of the neutral owner, the finding of the court being that where a neutral vessel with false papers has been engaged in carrying contraband intended to be delivered to the enemy, but that intention has been frustrated or abandoned, and the goods have been sold and delivered to other buyers, the vessel, if captured and seized as prize on the return voyage, is not liable to confisca tion. Lastly we may note shortly the point decided in The Tubantia, et al.,8 that contraband goods sent by post are when seized as prize liable to condemnation; also that dealt with in The Bilbster, where it was on goods belonging to alien enemies has no right in the event of capture and condemnation of the cargo, to recover the freight from the ship owners or to obtain from the Crown payment out of the proceeds of the cargo. DONALD MACKAY. Glasgow, Scotland. IRRIGATION HAS A STATE THE RIGHT TO FORBID THE DIVERSION OF WATER FROM A STREAM FLOWING WHOLLY WITHIN THE STATE TO BE APPLIED TO A BENEFICIAL USE IN ANOTHER STATE? In one of those interesting, clear, and tersely written opinions of Judge Ailshie, of the Idaho Supreme Court,' the court held that the state had this right. One reads the decisions of this Judge with both profit and pleasure and whole sermons are not infrequently found therein. The reasons given by the Idaho court in the case just cited in upholding the right would, no doubt, be held perfectly good in any other of the states in the arid region of the West. The court desires at the outset that it be understood that the question of diversion of water from an interstate stream into another state is not considered. The Idaho case arose under the following circumstances: Respondents, residents of the state of Montana, applied to the state engineer of the state of Idaho for a permit to appropriate water from a creek lying wholly within the state of Idaho. The waters were to be carried beyond the water shed laid down that a person who pays freight of the creek into Montana and there used for irrigation purposes. The permit was issued as was another and prior permit (1) Walbridge et al. v. Robinson, State Engineer, 22 Idaho, 236, 43 L. R. A. (N. S.) 240, 125 Pac. 812. to another applicant for the same purpose. Subsequent to the issuance of the permit to respondents, a contest was filed by respondents and after a hearing the state engineer refused to grant any relief to either of the parties or to take any action on the matter on the ground that in issuing the permits he had exceeded his lawful authority in attempting to grant a permit for the diversion of waters of his state to be applied to a beneficial use in another state. Thereafter the respondents represented to the state engineer that they had con structed their diversion works, as required under the application and permit, and were prepared to make proof of the completion of the work as required by law and asked that notice be given of the hearing and that they be given a certificate of the completion of their works. The state engineer refused to give notice or take any action in the matter for the reasons above stated. The district court granted a writ of mandamus to compel defendant to give notice of proof of completion of work of diversion of water from the stream and grant a certificate of completion. Thereupon the state engineer, acting under authority of the state, appealed the case. the public waters of the state and that, therefore, it does not intend to make new law. The court, in its support of these two contentions, says that it is clear that the title to the public waters of the state is vested in the state for the use and benefit of all the citizens of the state, under such rules and regulations as may be subscribed from time to time by the law making power of the state. That this is not, however, an interest or title in the proprietary sense, but rather in the sovereign capacity as representative of all the people for the purpose of guaranteeing that the common rights of all shall be equally protected and that no one shall be denied his proper use and benefit of this common necessity. Comparison is then made between running water and ferae naturae and cites the following cases: "Water and oil, and still more strongly gas, may be classified by themselves... as minerals ferae naturae. In common with animals, and unlike other minerals they have the power and tendency to escape without volition of the owner." "The members of the community have a common interest in the water."4 In speaking of the relative rights of the individual and the state to water, light and This official's 'contentions on appeal air, it is said: "It is . . . (difficult) to were as follows: 1. That under the constitution and laws of Idaho, the waters of that state belong to and are owned by the state and that the state holds the title to all the public waters in common for the benefit of all the people of the state.2 2. That this statement of the law is only a written expression of what the law has always been with reference to understand how a (person) can be said to have property in water, light, or air, of so fixed and positive a character as to deprive the sovereign power of the right to control it for the public good and convenience. Such a right exists as to individuals and it cannot be interfered with by them. But the state, in virtue of her right of eminent domain, has the paramount right to control and dispose of everything within her limits which is not (2) Art. 15, Sec. 1, Constitution of Idaho, Sec. 3240, Revised Codes of Idaho; Art. XVI, Sec. 5, Constitution of Colorado; Art. XVI, Sec. 2, Constitution of New Mexico; Rev. Stats., Ariz., '01, Sec. 22, 4174; Acts of 1907, as amended by Acts of 1909, Nevada; Compiled Laws of Utah, 1907, Sec. 1288. (3) Westmoreland and C. Natural Gas. Co. v. De Witt, 130 Pa. 235, 5 L. R. A. 731, 18 Atl. 724. (4) Katz v. Walkinshaw, 141 Cal. 116, 64 L. R. A. 236, 99 Am. St. R. 35, 70 Pac. 663, 74 Pac. 766. |