into the question for purposes of evasion. It is really pathetic to behold how tenderly the "people's " rights are looked after by railway corporations and their attorneys, retained by the year and in droves.

relation to franchises is to-day the same as when the above lines from our legal luminary were written, and the State legislature, representing the constitutional manifestation of the taxing power, recognized this irrefutable principle when it enacted the recent The State authorities are in no danger of overlaw on franchises. What does Professor Holland stepping the boundaries by insisting that these public write, at page 190 of his work on "The Elements of corporations, accorded valuable privileges by the Jurisprudence?" (mind you). "A franchise can be State, should pay for them. They simply say: "Thou acquired only by royal grant, actual or presumed, | shalt render unto Caesar that which is Caesar's." and may be assigned by deed." Naturally assignable The people are protected by this State supervision by deed, naturally divisible into a branch of real better than they were under the former condition, property, yes, but something distinct from the and, as individuals or corporations ("aggregations “grundsatz” or land, and distinct from roadbeds or of individuals, with special legal responsibilities and "structures" erected upon them. Pray, why not prerogatives "), they are not hindered in their contaxable then distinctly as a special sort of real stitutional right to enjoy the possession of their property," having not only a value, but a significant, private property in security Section 2 of article 10 ponderous value? Stick to original principles and of the State Constitution is not jeopardized in the you cannot go far astray, senator. Here is more slightest. In fact, it requires a mind trained to authority for the thesis of the State. Look at Taylor the subterfuges and technical evasions practiced by on Corporations, section 477a After distinctly stat-corporation attorneys to perceive how the section ing that a construction of tax laws that will impose is applicable at all. I would concede that if the double taxation is not to be adopted, unless required power-houses, car stables, etc., were taxed by the by the express words of the statute or by necessary implication, writes: "The franchise of a corporation is plainly distinct from its capital or property; consequently, a tax on the franchise, coupled with a tax on the capital or property of a corporation, is not double taxation." Also cases cited in note 4, vide note 2, under section 477. How Mr. Hill can contrive to drag in Magna Charta in aid of his unconstitutional argument is another of those mysteries of sophistry and legal twaddle. What, in the name of the seven wonders of the world, have local assessors to do with contractual grants, made with charter limitations, intended to preserve and demark the sovereign State's immediate controlling power over a creation, purely and solely of its own begetting? so far as its franchises" or "privileges" apart from and exclusive of the ordinary rights of a property holder are concerned. Conceded that it has Magna Charta rights over its private property, and, to a certain extent, over its "quasi public" property, such as the State's highways. What does that avail against the fact that its franchise is a special privilege, grant, incorporeal hereditament, whatever you will, in addition to its other rights as a taxpayer, dependent upon the police power of the State for its constitutional enjoyment, hence responsible to the State and owing to the State. Mr. Hill's invocation of "Magna Charta" and the State Constitution" is something akin to the summoning up by the unlucky fisherman in the fable of his evil genius. It proved his undoing, and it will certainly prove Mr. Hill's undoing. These franchises that corporations hold over public property, while legal and constitutional, are only so when subject to the State's wary eye and authority. The sovereignty, as exemplified in the State (really only the sovereign people) is much more concerned that corporations exercising valuable privileges pay for them adequately than that a petty question of local privilege should be dragged

66

State board of tax commissioners arbitrarily, to the exclusion of the local assessors, that the section would have a material bearing, but the refinement of legal reasoning by which these railway attorneys stretch the meaning of a section in the Constitution to suit their own purposes is to me, at least, incomprehensible. I notice that Mr. Page, after conceding for the purposes of his argument, of course, the untenability of the position his predecessors and colleagues have taken in defending the corporations, says: "The ordinary taxes on real estate, amounting to several hundred thousand dollars; the taxes to pay the expenses of the railroad commissioners, the taxes of licenses and percentages required by the terms of the special franchises themselves, and to be acquired by consolidation, all these ordinary, extraordinary and special taxes, aggregating a million dollars annually (in the case of his company) the company expected to pay," etc., but substantially they did not reckon upon paying anything in consideration of the State granting them the broadest privileges ever granted to any street railway in the country, beyond these mere license fees and percentages and ordinary taxes on real estate, which any other private corporation, asking the privilege of corporation existence, must pay. Why, of course not; Mr. Attorney cannot perceive that a railway corporation is different from any other common business corporation, asking no further privileges from the State than bare corporate existence. Possibly the fairer way would be to pay the corporation a bonus annually to use public property and dole out to the public for additional pay the service to which the public is entitled from any citizen or corporation that it spends its "nickels" with. If the franchise is worth nothing, Mr. Attorney, why did your company make such a tremendous effort to secure it? Why can your stockholders invest millions of dollars in an enterprise whose "franchise" value is not

worth a paltry million a year to its generous donor? Now, do not repeat that old story about the license fees, railroad commissioners, fees, taxes on real estate, other than the taxes on the incorporeal right of franchise; it is not relevant, and it shows conclusively you are insulting the intelligence of the people and the intelligence of the legislature by doing So. We understand clearly that your clients' think they are doing the public a favor beyond the peradventure of repayment by taking the money of the public and assuming the onerous burden of running the railways upon a twenty per cent basis of return to your stockholders, when the public could do it for one-half of the expense, probably; but your argument about payment of other taxes is not relevant to the issue, and you will find that it is not so. But enough of this. The subject does not require further elucidation. The public knows what it is doing, and for once the State legislature framed a law, at least, strictly in accordance with the Constitution and the rights of the people-a good law, a sound law, a wise exercise of the taxing power. "Vive la republique, et vive le droit!"

entire abandonment, in the recently-decided case of Corbin v. Baker (167 N. Y. 128).

Perhaps no one would profess greater surprise than the judges of the Court of Appeals themselves, were it suggested that the decision in Corbin v. Baker, founded, as it purports to be, on the authority of the older cases, is, in effect, antagonistic to them. A brief statement of the facts in Corbin v. Baker is here needed:

By his will, James Gordon Bennett gave his estate to his son, one-half in fee and the other half in trust for his (the testator's) daughter for her life, remainder over to her children. At a partition sale of the real estate the trustee, Bennett, Jr., bought the entire property for himself, individually, and the sale was thereafter confirmed by the court. The life tenant and infant remaindermen, through their guardian, were made parties to the action, and all the proceedings seem to have been had in due and usual form, all but the one presently to be noted. Bennett, Jr., thereafter sold some of the property thus purchased to the plaintiff in this action, and it is to compel the plaintiff's vendee (the defendant, Baker) to take title, that the action of Corbin v. Baker was brought, which action has been decided in favor of the plaintiff, thereby removing the cloud which the trustee, Bennett's purchase, had put upon the property.

In reference to the point raised by Ex-Judge Brown as to the methods of administering the tax by the commissioners, the point does not bear upon the constitutionality of the law itself, and is not within the scope of this article Some of the corporations affected by the law claim that some of As already stated, it was an immemorial rule of their franchises, now held under a consolidated equity that a trustee could not purchase for himself charter, were yet acquired at different dates, under the trust estate. "A person cannot act as agent for different franchises, and that hence their taxation another and become himself the buyer," says Chanas one franchise is unfair and improper. This posi- cellor Kent. "It is incompatible with his fiduciary tion of the company also seems to contain a non- relationship. The rule is founded on the danger of sequitur” also. In the case of Shields v. Ohio (re-imposition and the presumption of fraud inaccessible ported in 95 U. S. 319) the court held that the to the eye of the court." It matters not that the consolidation of different corporations into one sale is properly advertised, that it is fair and open, works their individual dissolution, and forms a new or that the trustee in buying pays a fair price. set of liabilities and responsibilities. the trustee buys, while his title is good against all the world, it is yet voidable as against the cestui, at his, the cestui's, election. The cestui can either affirm the sale and thus perfect the title in the trustee, or he can insist on a resale of the property. If it brings less on the resale than the trustee has previously bid, the trustee can be held to his bargain. Such was the rule laid down by Kent in Davoue v. Fanning (2 Johns. Ch. 251), where the great chancellor exhaustively reviewed the English and American

ALEXANDER LEE HIRSCHBERG. MT. VERNON, N. Y., January, 1902.

THE TRUSTEE'S RIGHT ΤΟ PURCHASE
THE TRUST ESTATE.

DOES CORBIN V. BAKER (167 N. Y. 128) OVERRULE
SCHOLLE V. SCHOLLE (101 N. Y. 161)?

No doctrine of equity has been more strenuously insisted upon than that the trustee is disabled by the fiduciary character of his position from purchasing for himself the trust estate; and no rule has been more rigidly enforced than that such a purchase by a trustee, though giving him a title good as against the rest of the world, is voidable at the election of the cestui que trust.

An unbroken line of decisions upheld this rule in all its pristine vigor in New York until its modification in the case of Scholle v. Scholle (101 N. Y. 161), and what appears to be its emasculation, if not

cases.

If

Later the case of Fulton v. Whitney (66 N. Y. 548), one of the long line of cases reaffirming Davoue v. Fanning laid stress on the point that the permission, in a decree of foreclosure or partition, to all parties to the action to buy at the sale, “does not affect equities which may exist between the purchaser and any other person for whose benefit the purchase may be deemed to have been made," such permission being only pro forma and based on the theory that all parties to the action were disabled from buying, or, perhaps, that the mortgagee, to whom the title anciently passed subject to the mort

gagor's equity of redemption, was trustee for the mortgagee, and that permission was required for him to bid.

But there came a line of cases in which the trustee, as in Corbin v. Baker, had an interest in the trust estate, and it was argued with great force that he should be allowed to protect that interest by bidding at the sale, and, if he bid the highest price, that the property should go to him individually as purchaser. Otherwise, were the trustee prohibited from bidding, it might be bought by a stranger for much less than the trustee himself was willing to pay, and thus occasion loss, not only to the trustee himself, but to the cestui, as well. Although it is plain that whether the trustee has or has not an interest of his own to protect, he will seek to buy as cheaply as possible, if permitted to buy at all, and the same danger to the cestui's interest is present in either case.

argues that if the court had power on a special application to permit the trustee to take an indefeasible title, it also has power to do this on the proceedings for confirmation.

In passing, it may well be questioned whether the court has the power to take away from the cestui his absolute right to affirm or disaffirm under any and all circumstances. By taking the matter in its own hands, does not the court elect for the cestui? But is not this a question more of expediency than of mere power? What adequate protection is there for the cestui in the confirmation proceeding, following, as it does, so quickly upon the sale, and no specific judicial inquiry being had? The cestui might not even be aware that the trustee intended to retain for himself the purchase he had made. And, indeed, in the absence of any statement or warning from his trustee, the cestui would have a perfect right to assume that the purchase of the trust estate by the trustee was for his (the cestui's)

But equity had provided for such a case. As far back as Campbell v. Walker (in 5 Vesey, 678) it was held that a trustee having an interest in the trust | protection and benefit It is of the very essence of estate to protect could file a bill in chancery, stating what was bid for the property and offering to pay The court would, after hearing all interested parties, practically divest him of his character of trustee, thus preventing all the consequences of his acting both for his cestui and himself.

more.

the trust relationship that the cestui should rest peacefully in the belief that the trustee is doing everything with an eye single to his (the cestui's) interest. When the trustee sets up an adverse title and the cestui has had full time and opportunity to investigate, then, and not until then, can the cestui be expected to shift for himself, and a court of equity will not shut the door with a slam on his right to disaffirm his trustee's action. At least, under the rule in the Scholle case, the permission granted to the trustee prior to the sale to purchase on his own account was, in effect, the divestiture of his trusteeship, in that it was a warning to the cestui to

The method later indicated in Davoue v. Fanning was for a trustee to file his bill and submit a disinterested appraisal of the value of the property, with his offer to pay a price equal to, or more than, such appraised value. On such application and on hearing all parties the court could give the trustee the right to take an absolutely indefeasible title. Look at these minute precautions, and then note look out for his own interest. how they have been whittled away.

But even this rule did not necessarily insure an The rule continued to be thus enforced until the honestly conducted sale. For, with the trustee still decision in Scholle v. Scholle, where the first modi- in control and managing the sale, in how many ways fication was introduced. Instead of an appraisal could he, by fixing an unfavorable time and place, and a bid being submitted by the trustee, a referee by frequent change of date and postponements and was appointed by the court to take testimony, and, by discouraging bidders, further his individual interafter hearing all parties, reported in favor of allow-ests and seek to purchase the property at the lowest ing the trustee to bid. It was not deemed advisable possible price, when, as trustee, it would be his duty in the Scholle case to fix an upset-price for the property, as, in the opinion of the experts who testified, such a course tended to keep bidders away. Whereas, until Scholle v. Scholle, an infant cestui one year old would have had until his majority, and, perhaps, even twenty years thereafter to disaffirm his trustee's purchase; by means of this special permission granted the cestui's right is cut down to the period covered by the suit. If we say the right was of too great duration, may we not also say that the way in which it is cut off is too summary?

to obtain the highest possible price? The conflict of interest and duty generally would result unfavorably to the interests of the cestui and the policy of the law enunciated over and over is not to place the trustee in such a position. As Kent says: It is poisonous in its consequences."

Through these modifications and changes the law to-day, as manifested in Corbin v. Baker, seems to be pretty nearly the reverse of what it was in Davoue v. Fanning, and, indeed, in cases as recent as Fulton v. Whitney. Gradually and by degrees imperceptible, at least to it, the Court of Appeals has And now, thirty years later, even the precautions drifted away from the old rule, until now a trustee taken in Scholle v. Scholle are dispensed with, and having an interest of his own to protect (and, perin Corbin v. Baker the judicial confirmation of the haps, even a trustee having no interest of his own sale is held to vest an indefeasible title in the pur- to protect) may buy the trust property and get an chasing trustee. indefeasible title against his cestui, unless the court, In his opinion in the latter case, Judge Gray on the application to confirm the sale, sees that some

ROBERT L. CUTTING, LL. B. No. 28 EAST 28TH ST., NEW YORK.

fraud has been practiced, or that the price is grossly wisdom of the chancellors who molded and applied inadequate and sets the sale aside. But will courts, the rule for centuries, and especially would it be a of their own motion, do this? Must not the fraud fitting memorial to our own great chancellor, James be apparent and glaring, and must it not practically Kent. be pointed out by the cestui? If this is so, the change in the ccstui's position is fundamental. First, he has an absolute right to set aside his trustee's purchase. Next, his absolute right may be taken from NOVEL USES OF THE WRIT OF INJUNCTION. him by specific judicial investigation under certain safeguards thrown around his interests, as in Scholle v. Scholle. Finally, his right is gone, and the court may give the trustee an indefeasible title by simply confirming the sale, which, in the absence of fraud on its face, or proof of actual fraud, it will presumably do. What about Kent's presumption of fraud inaccessible to the eye of the court, and derived from the relation of the parties?

If the whole matter is to be left to the court on the proceedings to confirm, and, if the court has power to confirm such a purchase, which Judge Gray tells us is the result of Scholle v. Scholle, then the court has usurped the right of election formerly belonging to the cestui, and, at least in cases where the trustee has an interest of his own to protect, the cestui is deprived of his ancient right of election. Clearly there is no longer for the cestui even the protection that the rule in the Scholle case gave him. Now it is not such a far cry from Scholle v. Scholle to Corbin v. Baker. The former, it is true, gave the cestui a little better chance, in that the trustee's application for permission to buy was notice to him that the trustee was openly about to look after his own interests, in derogation of the cestui's. Because the trustee, as a purchaser, is incompatible with the trustee trying to get the highest price for the trust

estate.

The vice of the whole thing is to leave the control and management of the sale in the trustee's hands where permission has been given to the trustee to buy. The trustee should resign or be removed and another and an entirely disinterested trustee be appointed by the court to conduct the sale. If the trustee is an honest man, he should be glad to escape from such an invidious position.

Desirable as it is in the interests of the marketability of titles to have some fixed rule by which a purchaser may know whether a title coming through one in a fiduciary position is good or bad, it is better that many titles should fail and remain unmarketable than that trustees should have a new field of fraud thrown open to them.

It is plain that even the rule in Scholle v. Scholle may not be a sufficient safeguard against fraud on the part of trustees, but the Court of Appeals might think it inexpedient to retrace its steps and to decide that a trustee cannot, under any circumstances, buy the trust estate, unless he resigns his trust, thereby reaffirming the old chancery rule.

The legislature, however, can very properly do this. The remedy would be simple, efficacious, easily workable and fair to all. It would be a tribute to the

The writ of injunction is, indeed, a wonderful writ. Originally its jurisdiction was limited to equitable remedies, but of late years its scope has broadened, and its aid is now invoked to restrain alike the disturber of a church meeting and to curb the emotions of the persistent lover. The writer gives in detail two peculiar cases in which the aid of a writ of injunction was recently invoked. One of Mr. John Kensit's followers, who is awaiting trial on the charge of "brawling" in church, was enjoined from visiting the church in question in the meantime for the purpose of creating a disturbance, a thing he had threatened to do. The wardens of the church, fearing a disturbance, applied for and obtained from Mr Justice Day, sitting in chambers, a writ of injunction restraining the offender from visiting their church. This is certainly a novel use of a law writ, but people must go to church to pray and behave themselves and not to engage in unpleasant discussions on theology. The writer recalls a somewhat similar case which happened in Suffol county several years ago. A certain individual had a habit of going to a certain church in Boston, and in the midst of the services he would arise and proceed to call members of the congregation such names as "whitened sepulchres," etc. The man was evidently deranged and suffering from religious monomania. He was arrested, tried and convicted in both the Municipal and Superior Courts. He was called for sentence in the Superior Court before Mr. Justice Sherman, and the following amusing dialogue took place between the judge and the prisoner:

Judge Sherman - If I place you on probation, can you keep away from that church?

Defendant No, your honor, I don't think I can. Judge- You have no more right to make a disturbance in church than you have to make a scene in a man's private dwelling.

The judge tried to reason with the defendant in his customary good-natured way, but to no avail. The defendant, having refused probation with proper conditions, was committed to jail in default of payment of a small fine.

Another novel use of the writ of injunction is seen in the following case: A certain young lady, an elocutionist and reader, of Toledo, Ohio, has been greatly annoyed of late by the attentions of a certain well-known lawyer and politician of that city. He seizes upon every opportunity of pouring into her ear his tale of love. And, while no doubt, she was pleased with the first instalments, she has sickened of his wearisome repetitions. After trying both

entreaties and threats, she, as a last resort, appealed provide for the careful administration of the penal to the Court of Common Pleas, which has enjoined laws, then it is equally so that the civil courts occupy her persistent admirer from further advances. If themselves with so-called frivolous cases than that the injunction proves unsuccessful, she might try one citizen should undergo any privation of rights elocution on him. "Love," says Dr. Johnson, "is at the hands of another, because of the expense the folly of a wise man and the wisdom of a fool." which the first must incur in order to secure justice. As a lawyer, I am unable to see on what grounds a As to any litigation being unnecessary, this can writ of injunction can issue in such a case; perhaps a only be determined by the event in each case. There court of equity regards unsolicited and persistent is always, at least, one party wrong in every suit, attentions from undesirable suitors as repeated tres- and, had he done what he should, it would have been passes. In such a case a court of equity clearly has unnecessary to try the issue, but, having failed so to competent jurisdiction. Time and again has the do, it becomes absolutely essential that justice be writ of injunction protected the weak and suffering done and that promptly and without expense to him from the aggressions of the rich and powerful, and who has been wronged. to-day, at the beginning of the twentieth century, bachelor girls invoke its powerful aid to shield them from the annoying attentions of undesirable suitors. JOSEPH M. SULLIVAN.