instant case, the trial court ruling as it did, contrary to what the Circuit Court of Appeals holds, "because the rule in California is that failure to record a transfer of real property renders such transfer void only as against subsequent purchasers or incumbrancers in good faith."

It seems to us, that the Circuit Court of Appeals ought to have discussed the question, whether the rule adhered to by a state, good as to all subsequent general creditors, was good so far as a trustee representing them in bankruptcy is concerned. What section of the bankruptcy statute places creditors of a bankrupt in a different situation than would be his creditors had no adjudication in bankruptcy resulted? If none, there was no federal question involved. In Michigan holding was in line with California ruling. Reed v. Brown, 151 N. W. 592. So in Louisiana; Merchants' & F. Bank v. Harris, 131 La. 829, 60 So. 362. And so in Ohio, if there are no fraudulent representations by grantee. See also Dow v. Union Natl. Bank, 100 N. E. 328.

It would seem that the bankruptcy act did not intend to vest any rights in general creditors they would not otherwise possess and this is exemplified by its recognition of liens acquired by state laws where not created and recorded within a certain time. Otherwise registration laws of a state are to have the effect state laws prescribe.

BRITISH WAR TRIBUNALS.

It is now after nearly two and a half years of war that one realizes how the character of the country is being gradually changed under the hard pressure of events. This is particularly reflected in the special courts which it has been found necessary to set up to deal with the various novel and complex problems caused by the war. The Court of Prize, of course, began operations immediately after the commencement of the war, but for it there had been long standing precedent and lawyers were, from the records of previous wars, familiar with its procedure. Then with regard to the ordinary Civil Courts, it was necessary at the outset of the war to pass an emergency statute empowering them in their discretion

to stay the hand of creditors who might be unduly panicky in pressing for debts, thereby possibly endangering the national financial stability. A similar emergency measure was passed with regard to mortgage interest forbidding the raising of it, or the raising of property rents during the war, this latter measure being passed in deference to a popular cry against exploitations by landlords, though why landlords should be restricted and merchants who sell food should be unrestricted, one has some difficulty in seeing.

Besides these measures, however, there have been absolutely new judicatories set up and we think that a brief account of what these are, and their functions will be interesting to all among our readers who are interested either in legal procedure or social science. These new tribunals may be grouped as relating to the three essential needs of the war-men, material, money.

1. As regards the supply of men for the army, it was early realized that in the interests of finance, the business of the country must not be let down, and that for the production of munitions, men ́must be retained in civil life. Accordingly on conscription being adopted in Britain there. were established tribunals who, generally speaking, were charged with the duty of holding the balance as between the military and civil needs of the country. These tribunals consist of three grades, first the local tribunal, second the appeal tribunal, and third the central tribunal. The procedure briefly is that when a man is called up to the army he has so many days within which to lodge an appeal with the local tribunal. The local tribunal hear him in person and also hear a representative of the military, and decide the case, giving the man either exemption or directing that his calling up be delayed so that he may have time to arrange his affairs. If either the man of the military representative is dissatisfied with this decision, he can go to the appeal tribunal where the procedure is similar If the appeal tribunal think that there is a

point of principle in the case which woul determine a class of cases they may allow appeal to the central tribunal. The tribunals are composed of gentlemen who are supposed to be familiar with the needs of business and are usually presided over by a county court judge. There has been much feeling aroused owing to certain of the decisions of the tribunals, but in view of the enormous work they have done and the unprecedented variety of cases that come before them, it must be said that taking the country all over they have justified their ap pointment.

2. Before the war had been very long in progress it became apparent that an overwhelming supply of munitions of war for Great Britain and her Allies was the essential element in the successful prosecution of the war, and the organization of the engineering section of the British industrial world on a new basis became imperative. A minister of munitions was appointed charged with the duty "to examine into and organize the sources of supply and the labor available for the supply of any kind of munitions of war" and this was followed by the passing of two munitions of war acts. These acts also set up three grades of tribunals, first the local munitions tribunal, second the general munitions tribunal, and third, the appeal munitions tribunal. The object of all this is to secure continuous work. Strikes of classes of workmen or stoppage of work by an individual workman may be investigated by these tribunals and penalties imposed on the offender. Also a workman engaged on munitions cannot leave his work at will, but must either have the employer's permission or the permission of the tribunal, and similarly a workman is protected against wrongful dismissal by the employer. Thus the scheme of this legislation is that for the time being the act is the charter of the industry of manufacturing munitions of war; that employers and workmen alike are under the orders of the minister of munitions; that the recognized methods of settling trade disputes

are temporarily supplanted by a system of arbitration; that in many respects freedom of contract is temporarily abrogated. The statutes emphasize the point that they are emergency measures for the period of the war only and undertakings are given tha: changes in practice made during the war shall not prejudice the position of trade unions or other labor combines. The tribunals under these acts consist of an equal number of employers' representatives and workmen's representatives with a chairman. appointed by the board of trade, who is usually a judge. The chairman is directed to consult with the other members of the court before giving his decision and where they are agreed the chairman is to give effect to their opinion "except as respects questions which appear to the chairman to be questions of law." In this case, too, we think, the verdict will be that the procedure has been a success and it is not unlikely that the machinery of these tribunals will be retained in existence after war and become regular wages courts for the purpose of dealing with disputes between employers and employed.

3. With regard to money, there was already in existence the machinery for the collection of the revenue and this has been fully utilized to ingather the increased taxation necessitated by the war, but with regard to an important item of revenue it has been found necessary to make special arrangements. This is the excess profits. Excess profits are defined to be the net profits so far as they exceed by one-fifth the standard profits. The standard amount of profit for any period is declared to be the average of the amount of the net profits for the two financial years before the outbreak of the war. Thus as one writer says the state. has become a sort of statutory partner in industrial concerns but a partner of a very unusual type who neither contributes any capital nor assumes any liabilities and yet takes the lion's share of the enhanced profits arising from exceptional industrial activity which would in normal circumstances go to

the owner of the business. The excess profits act provides and indeed facilitates arrangements by which the revenue authorities and the owner of a business may agree as to the standard amount of profits and the amount of excess profits, but if they cannot agree the question is referred to a board of referees. These referees are usually accountants of good standing who are

also presided over by someone with lega! experience. This tribunal has not yet been sufficiently long in existence to enable us to describe its procedure or to criticise its workings, but of the important part that it is destined to play there can be no doubt. Already with the prolongation of the war there is a demand arising that all excess profits go to the state and as this demand hardens the duty of this board of referees in dealing fairly as between the state and owners of businesses will become increasingly difficult and, let us add, correspondingly interesting.

Glasgow, Scotland.

DONALD MACKAY.

THE INHERITANCE TAX-DOUBLE AND MULTIPLE.

Over a century ago Jeremy Bentham in his celebrated essay entitled "Supply Without Burden" propounded the riddle:

"What is that mode of supply of which the twentieth part is a tax, and that a heavy one, while the whole would be no tax, and would not be felt by anybody?"

The answer stated being the appropriation, "to the use of the public," under certain circumstances, of all the property of a decedent, or, in the author's quaint phrase:

"The riddle begins to solve itself: a part taken and a sense of burthen left; the whole taken and no such effect produced; the effect of a part, greater than the effect of a whole; the old Greck paradox verified, the part greater than the whole. Suffer a mass of property in which a man has an interest to get into his hands, his expectation, his

imagination, his attention at least fastens upon the whole. Take from him afterward a part *** the parting with it cannot but excite something of the sensation of a loss. *** Take from him now (I should not say 'take') but keep from him the whole, so keeping it from him that there shall never have been a time when he expected to receive it; all hardship, all suffering, is out of the case."

Inherited Wealth-When the scope of many Modern Tendency to Destroy Right of

of the present day statutes of the various states imposing taxes upon inheritances is realized, one is forced to the conclusion that this simple method of lightening the burden of taxation by destroying all expectation of inherited wealth is the real object aimed at. The public to be enriched by this process of escheat in Bentham's time was a single entity and not nearly two score states of the American union all seeking revenue from this prolific source. The most masterly of riddle makers must pause at the thought of so many publics added to a combined general public each and all engaged in benefiting from succession to the same property.

States Yield Easily to Temptation to Exercise Power for Double Tax-The temptation to supplement revenues by laying a tax upon the transfer of personal property of non-resident decedents upon the ground of situs alone, has been too strong to be resisted by many of the states imposing this kind of tax. The comptroller of one of the Eastern states is quoted as saying, during an investigation recently held that, “under the inheritance tax law the state will collect close to $3,000,000 this year, if not more, at a cost not exceeding two per cent (2 per cent) and I will let you in on something sweet-more than sixty per cent of that tax comes from non-residents, and it is practically clear gain to the state."

Golden Rule Violated-The impolicy of such taxation of non-resident estates considered economically and the disregard of interstate comity involved in the practice are as nothing compared to the so-called

The Basis of the Claim for Double Tax -While the acts of the legislatures of some of the states, notably New York, Massachusetts, Rhode Island, Connecticut and to a certain extent New Jersey, have recently indicated a tendency to restrict materially the definition of property of non-resident decedents subject to the transfer tax, others still maintain demands based upon the purpose voiced by the judicial construction of the Massachusetts statute before revision:

"The language of the taxing statute indicates an intention on the part of the legislature to tax all property that it has the power to tax. The statute is as broad as the jurisdiction of the commonwealth."

Circumstances Under Which Multiplicity of Tax Arises-The possibilities and indeed the actualities of double and multiple burdens upon the same intangible property under schemes of taxation based upon this principle have frequently been pointed out. It permits the double taxation of shares of stock of corporations organized under the laws of the taxing state where the stockholder had his domicile elsewhere, once at the domicile and once by the state of incorporation. If, as often happens, in the case of railroad companies, the corporation is organized in several states, there is no constitutional objection to as many taxes added to the tax by the state of the domicile as there are states of incorporation. Under these circumstances, however, fortunately, the practice ordinarily has been to tax the

(1) Peabody v. Treasurer and Receiver General, 215 Mass. 129, 102 N. E. 435.

decedent proportionately according to the value of the property of the corporation in the several states. Nevertheless since the method of ascertaining the value of the proportion of such property is necessarily left to the determination of the courts of the various states, a difference in methods is likely to result in a tax upon more than one hundred per cent (100 per cent) of the value of the stock owned.

Further Considerations for the Intending Investor-The holder of bonds of a corporation may be legally thrice subjected to tax, i. e., one tax by the state of domicile, again by the state, apart from that of domicile, where the bonds may happen to be physically located, and still again by the state where the corporation whose obligations are held is incorporated. If the corporation. happens to be of that class incorporated in more than one state the triple tax pointed out may readily become multiple to the extent of the number of states in which the corporation is organized. This claim for a multiple tax was made by the officers of the state of Minnesota in a recent case and while the court refused to commit that particular state to such an iniquitous policy, at the same time there was no denial of the power of the state to impose and collect such a tax.

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Credits not evidenced by or incorporated in written instruments, such as open counts, are subject to tax by the jurisdiction of the debtor's domicile as well as by the state of the decedent's domicile. Mortgages upon real estate are subject to taxation, once by the state of the domicile and again by the state or states where the land lies. Promissory notes are subject to a burden in the jurisdiction in which the maker is domiciled. They are also subject to tax by the state of domicile of obligee, and the United States Supreme Court has held that they may be also taxed by the state where the notes are permanently located.2

The Possibilities of Extension of Multiple Tax-Counsel for the estate of Tiffany involved in Wheeler v. New York, supra, suggests still further interesting developments of this theory, saying:

"The definition of the statutory construction law of personal property, if applicable to the Transfer Tax Act on the question of situs, includes also bills of lading, deeds, bills of sale and leases. If these documents, because of the statutory construction law, are to be regarded as containing in themselves the full value of the property they symbolize, then a Connecticut decedent would be taxed on the value of his homestead, if the deed were here: or on his leasehold interest in a Minnesota iron mine, if the lease were here; a Georgia planter consigning cotton to Liverpool would pay a tax to New York on the full value of the cotton if he died while the bills of lading were in the hands of his New York bankers; if a Boston wool importer should die while his cargo of Australian wool was crossing the Indian ocean, his estate would pay taxes to New York if the invoice had reached his agent here by fast mail. But suppose the invoice were here and the bill of lading in another state; which state would collect an inheritance tax-or would both?"

If the makers of the notes, the transfer of which were taxed in the case of Wheeler v. New York, were several and domiciled in several states, the multiplicity of the tax would be limited only by the number of the domiciles and of the obligors. Likewise notes issued by corporations are similarly subject to a multiplicity of demands under the same circumstances.

The state comptroller of California in a recent able report which deserves wide dissemination touches on the situation in the following language:

Resident's Personal Property Outside State-"Now, as to an inheritance tax upon personal property: First, let me remark there is no issue as to such taxation upon real estate. It should be, and is, taxed in the state of its situs.

"But there is no such unanimity concerning the taxation of personal property. That is frequently made subject to an inheritance tax in two states and sometimes in

three. This means either double or triple taxation.

"Double taxation may be justified under certain circumstances, but should be avoided as far as practicable. It will prevail, however, in my opinion, until the states adopt uniform inheritance tax legislation.

The Courts' Emphatic Stand-“It has been the law and the policy of California, as well as of other states, to impose an inheritance tax upon the personal property of a decedent who was a resident of this state, no matter where the personal property might be located, whether in or out of California. The right of the state having the primary administration of an estate-the state of the domicile of the decedent owner -to tax personal property having its situs outside of the state, is not only the law of California, but it has been upheld by the courts, even as affecting personal property which never was in this state and, moreover, under the will of the decedent (estate of Hodges, Cal.) was bequeathed to nonresidents and so in all probability never will be brought here.

Our Inconsistent Policy-"With this ruling I have no quarrel. I think it is a just one. The domiciliary state is the logical taxing power under such circumstances. It certainly should not be deprived of this power.

"But California and other states are not consistent in this regard. They insist upon following the personal property of a deceased resident to the ends of the earth, so to speak, but on the other hand, also insist upon taxing all personal property of a nonresident found within their borders.

"And California, as well as certain other states, likewise tax the stock of corporations incorporated under their laws which is held by non-resident decedents.

Would Mean Revenue Loss-"I have not time in this paper to pursue this topic much further. I consider the policy inconsistent, if not unjust. Yet to abandon it would cost California several hundred thousand dollars a year. And while I hold a state had better lose revenue than obtain it unjustly, it is difficult to see how California can cut off this source of income unless all the other states do likewise.

"And so, again, we are back to the issue of uniformity.

Retaliatory Provisions-"It would seem that if the states could not have uniform