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should be strong enough to encourage such a The Albany Law Journal.

healthy change. Let this be done, and to their

advantage as well as to the public will it reALBANY, NOVEMBER 30, 1895.

dound. If they do not, or if the movement is

left for a few to accomplish, simplicity in proCurrent Lopics.

cedure will never come, or else some fellow in

the future will reap the advantage of the slow [All communications intended for the Editor should be ad- change. The desire to have such a modificadressed simply to the Editor of THE ALBANY LAW JOURNAL. All letters relating to advertisements, subscriptions, or other

tion as we have suggested is not by any means business matters, should be addressed to THE ALBANY LAW

The promoters of this scheme have JOURNAL COMPANY.]

done what they could in the past.

Bar assoE publish in this issue of the Law JOUR- ciations have attempted it. But it is really piti

NAL the opinion of Judge Follett, of ful to contemplate the few who have such a the General Term, First Department, in Bowen beneficial desire sufficiently to actively urge v. Sweeney et al. It is not only clearly ex

these measures, pressed and terse in its phraseology, but it is also important to show the cumbersomeness of An important decision in regard to banks and our present practice, a subject on which we are banking, assignments for the benefit of creditever ready and willing to write. Judge Follett ors and following a trust fund has been made shows that after an elaborate trial of the issue in the District Court of Chisago county, Minn., of testamentary capacity in a proceeding be in the the Matter of the Assignment of James F. fore a surrogate for probate, and an adjudica- Kingsland. The court holds that a bank which tion in favor of the will, the heirs of the testa

makes collections from time to time and at tor, although parties to the former proceeding, stated intervals remits the proceeds thereof, is a may still re-litigate the question of the validity mere debtor of the owner of the moneys colof the will in an action of ejectment or for lected, and not a trustee.

And where, upon partition. It is shown that a similar anomaly in the insolvency of such bank, it cannot be shown the law of England was abrogated by statute that among the moneys turned over to the asin 1857, it being then provided that a decree of signee are the identical moneys collected by the a probate court, admitting to probate a will bank, the creditor will not be treated as a reswhich relates to realty and personalty, is bind- tuis quc trust, and the moneys in the assignee's ing on the heir in case he had notice.

hands as

trust funds, but such creditor will It would seem as though it has become neces

have to share with the other creditors in the sary for the courts to point out the unfortunate dividends of the estate. The opinion by Judge condition of our practice and to demonstrate Williston is as follows: that simplicity is a much-to-be-longed-for end.

Upon the hearing of the order to show cause, The thought of entering into litigation is no proof was offered tending to show that the dreaded by the public, who recognize the cum moneys so collected formed any part of the bersomeness of our prevailing mode of prac- moneys received by the assignee, nor was any tice and the delays to be encountered. This proof offered tending to show what disposition feeling is one which reacts on the legal profes- | said assignee made of any such money. sion and not on the members of the bench, In this proceeding the petitioner prays that who, however, reveal their interest in their call- the assignee be directed to pay over to it the ing by again and again pointing out what, at money's so collected, deducting the agreed compresent, constitutes its greatest detriment. mission thereon due the assignor for making Would it not be beautiful to read the address the collections; in other words, it claims that of the President of the American Bar Associa- , it is to be treated as a preferred creditor. tion at the next annual meeting if he could It bases its right to be so treated as a preshow that the legislatures of the different ferred creditor upon its claim that the insolvent States had stopped passing new laws and were stands in the relation of a trustee for the petiendeavoring to simplify those which had al- tioner; that the moneys collected by him were ready been passed? The influence of the bar at all times the property of the petitioner, held

Vol. 52 - No. 22.

in trust for it by the insolvent; that, as trust and banking business in like matters. Comfunds, they came into the hands of the assignee. mercial Bank of Pennsylvania v. Armstrong, who holds them impressed with the trust; and 148 U. S. 50, 58, bk. 37, L. Ed. 560, 367; that, wholly ignoring the rights of the other Henry v. Martin (Wis.), 60 N. W. Rep. 269; creditors, the petitioner is of right entitled to Westfall v. Mullen (Minn.), 59 N. W. Rep. 633. be paid in full out of the moneys in the hands Second. Admitting that the relation of cestui of the assignee. For anything to the contrary que trust and trustees did exist between the appearing, the moneys so received by the in- parties, the petitioner is not entitled to the resolvent may have been used by him in paying lief demanded. The principle is not ques. his debts, or in some other manner been wholly tioned that whenever a trust fund has been dissipated prior to the assigment.

wrongfully converted into another species of The petitioner is not entitled to such a pref- property, if its identity can be traced, it will be erence for:

held in its new form liable to the rights of the First. The relation existing between it and original owner or cestui que trust, and that such the insolvent was that of debtor and creditor. | right ceases only when the means of ascertainIt appears from the contract between the par- ment fail. The touchstone of the right of the ties that it was not by either pariy intended

owner of the trust property to be indemnified that the identical money collected should be from any property or fund which represents remitted to the petitioner, or that it should by the original property or fund is the trust the insolvent be kept separate and distinct from fund, into the property or fund out of the funds used by him in his general banking which the indemnity is demanded; the identibusiness; on the contrary, it does appear that fication not appearing, the right does not it was the intention of each party that the exist. Story's Eq. Jur. (6th Ed), SS 1257, moneys collected should become a part of the 1259; Perry on Trusts, $ 636; Cook v. Tullis, common 'banking fund and moneys of the in-85 U. S. (18 Wall.) 332, bk. 21, L. ed. 933; solvent, to be held and used by him in the same Union Natl. Bank v. Goetz (I11.), 27 N. E. manner as the moneys deposited with him by Rep. 907. general depositors. The language of the con

A general assignment for the benefit of credittract is:

ors does not pass a trust estate. In such cases “ All that we expect you to do is to receipt it requires special words to vest the estate in the pass-book for the collection and enter the the assignee. If the assignor has converted the amount collected on the duplicate collection trust estate into other property, the cestui que sheets, one of which you will retain and the trust may follow it into the hands of the asother you will mail to this office once a month, signeee, so far as he can identify the particular with draft to cover collections, less your one per property obtained by breach of the trust; but cent commissions.” The construction of the if the trust property has become so amalgacontract is, that the bank should upon or near mated with the general mass of the bankrupt's the last day of the month remit to the peti-estate that it cannot be traced or identified, tioner the amount due it for all collections the cestui que trust must prove his claim. Perry made during the month, or, if the remittance on Trusts, Sec. 345; Hill on Trustees; Neely should not be made until after such last day, v. Rood (Mich.), 19 N. W. Rep. 920. but in the early days of the next month, then In the case at bar, if the relation of cestui qul that such remittance should cover all collec- trust and trustee ever existed, the trust moneys tions made for the preceding month that the have become so mixed and mingled with other bank should remit, not the identical money by moneys of the trustee that it is impossible to it received or any moneys by it substituted trace or identify any of them as forming a part therefor, but by its draft, and that intermediate of the funds received by the assignee, and, by such collections and remittance the bank should reason of such mingling, the petitioner is not hold and treat the moneys so collected as an ordi- entitled to the relief demanded. nary deposit made by the petitioner. That would In Little v. Chadwick, 151 Mass. 110; S. C. be according to the usual course of collection | 28 N. E. 1005, the court say: “The court

will go as far as it can in thus tracing and fol- there is no principle of common law or of equity lowing trust money; but when, as a matter of justifying the granting of the relief demanded fact, it can not be traced, the equitable right by the petitioner. of the cestui que trust to follow it fails. Under such circumstances, if the

A knowledge of human nature is, per

custee has become bankrupt, the court does not say that the money haps, as essential to the practicing lawyer is to be found somewhere in the general estate

as a thorough appreciation of the law, its of the trustee that still remains. He may have

statutes, decisions and general principles. For lost it with property of his own, and in such

years past in England as well as in this

country case the cestui que trust can only come in and

the New Woman has caused agitation and dis

cussion by her demands for equality of the share with the general creditors.” There is nothing to the contrary in National

sexes, reform of the marriage laws and other

similar mcasures. Bank v. Insurance Co., 104 U. S. 54, 66, 71;

In England the movement

has been somewhat more pronounced than bk. 26 L. Ed. 693, 695, 700; or in the Matter

elsewhere and has extended to a different class of Hallet's Estate, 18 Ch. Div. 696, 708. See also Ferris v. Van Hooten, 73 N. Y. 113;

of people from those interested here, who are Cavin v. Gleason, 113 N. Y. 256; Atkins v.

given more to other subjects, such as socialism, Rochester Ptg. Co., 114 N. Y. 168; Appal Hop- than in the main question of the right of kins (Pa.), 9 Atl. Rp. 867; Engler v. Offutt, 70

women to vote and to have absolute equality

with the members of the sterner sex. It is Md. 78; S. C., 16 Atl. Rep. 497; Union Natl.

true that very little that was tangible has been Bank v. Goetz (Ill.), 27 N. E. Rep. 907; Sherwood v. Millford State Bank, 04 Mich. 78; s.c. accomplished beyond the production of a vast 53 N. W. Rep. 928; Anheuser-Busch Brewing of problems against which the public appetite

amount of unsavory literature and a long series Co. v. Clayton, 6 U. S. C. C. A. 108; Nono

has already commenced to revolt. In England tuck Silk Co. v. Flanders (Wis.), 58 N. W. Rep.

especially there were signs that the whole 283; Bank of Commerce v. Russell, 2 Dillon's

movement was losing its impetus and that

society was relapsing into the old-fashioned The failure of the bank to remit was a breach

ideas about woman's sphere, when all at once of duty on its part, but it does not follow that

there flashed on the horizon a w nan whose other moneys subsequently received by the

remarkable theories and principles extend bebank, and which may have come into the hands

yond any formerly advanced. It was only of the assignee, became impressed with a trust

three weeks ago that one lone woman made a or charge which would give the petitioner a

declaration that set all England ablaze with preference on distribution of the funds re

controversy, which finally landed its author in ceived by the assignee.

a lunatic asylum, from which she was finally A trust creditor is not entitled to preference rescued by extraordinary processes of law, and over general creditors merely on the ground of which is, perhaps, the most conspicuous stand the nature of the claim: Freiburg v. Stoddart

woman has publicly and noto(Pa.), 28 Atl. Rep. 11; Cavin v. Gleason, 105

riously taken. The woman we have referred to N. Y. 256; North Dakota Elevator Co. v. Clark

is Miss Edith Lanchester, who is said to be (N. D.), 53 N. W. Rep. 175.

very attractive and to come from a family of The case of Westfall v. Mullen, determined

means and social position, in fact from a by the Supreme Court of this State and cited servative English family. Miss Lanchester above, is decisive of the matter at bar. The

was thoroughly educated and became interested language of the late chief justice in that case is during her term of síudy in many socialistic equally applicable to this, that “to allow such

problems which brought her more or less into claims to be paid in full out of the assets when contact with others who were likewise conall claims can not be paid in full, would give a cerned in the advancement of the same preference to such claims. There is nothing in theories. Her interest in the problem of the insolvency law justifying it."

socialism led her to leave her family and take In this case it might further be said that lodgings, and it was at this time that the

C. C. R. 215.

which any

con

to

tants.

theories and principles which we have referred it appeared that in 1886, Iola, a city under the

as most remarkable were first advanced. Constitution of Kentucky, rating as of the third Miss Lanchester had formerly been regarded class, granted to the Lola Gas & Coal Company, as a sincere, high-minded girl of little more its successors and assigns, the right to lay gas than legal age, and had never attempted or pipes and mains in the streets and public threatened to violate any of the conventionali- grounds for the purpose of supplying the city ties of life; but, in proportion to the increasing and its inhabitants with gas. In the charter no interest which she took in socialistic problems, rates were prescribed, except that the company came, also, an added concern in the principle should not charge the city more than one dol. that man and woman might love each other, lar

per thousand cubic feet of gas for lighting but in order to remain as individuals and as the public buildings. It appears from the facts equals no marriage service of any kind should that on September 12, 1889, the company with occur, Falling in love with a man, Miss Lan the assent of the city, assigned all its rights and chester advanced her ideas and proceeded to interests to one W. S. Pryor and another, their carry them out, having in mind at all times a heirs and assigns, one of the conditions being definite time when she should begin her rela-that said assignees would furnish private familtions with the man of her choice. Shortly be-ies with gas at the price not exceeding $2.50 fore the time set by Miss Lanchester for the per stove per month and forty cents per month commencement of her relations with the map

per burner for illuminating purposes; and for in question, her father and brothers, under the

some years past, said assignees have been furLunacy Act, sued out a process to enable them nishing natural gas to the city and its inhabito confine her in a lunatic asylum as an alleged

On May 10, 1895, the city enacted insane person.

After more or less legal con an ordinance providing, among other things, troversy and wrangling Miss Lanchester was at that it should be unlawful for any person, firm last released from the asylum and started on or corporation furnishing gas in said city to the career which she herself had marked out.

charge anything in excess of the prices therein The case is extremely interesting from many fixed, which were very much lower than those standpoints. To the lawyer, at least, it illus-named in the assignment, and lower than those trates the many deficiencies and errors which received from consumers. The Supreme Court exist in the marriage laws, as well as calls held that such an ordinance is inoperative and attention to a case which may be followed by void as to said Pryor and his partner, their other women who may discover that the lack heirs and assigns, in so far as the same pur. of uniformity between the laws of our different parts to establish prices for gas furnished by States and the absence of respect for the de them to private consumers. The theory of the crees of another court has made the relation decision to us appears to be sound and proper. and forms of marriage of very little value, at The franchise originally only limited the comleast in the eyes of many who enter wedded

pany as to the price they shonld charge the city, life and seek divorce with practically the same and their assignees should properly only be sense of obligation.

limited in the same manner as predecessors,

especially in view of the fact that the city con Recently it has become a familiar practice sented to the assignment. We believe that it is with legislatures and governments of munici- dangerous for legislatures and municipal governpalities to attempt to regulate the price of vari ments to attempt to limit the price of commodious commodities which are sold to the public ties unless the parties furnishing the materials at large. Especially in the legislature of this or products have an exclusive monopoly of the State it has frequently been the case that at business. In any State the excessive abuse of tempts have been made to regulate the price of the powers granted to a corporation, firm or ingas, and the same general practice has obtained | dividual, will result in the commencement of in the different cities of the State.

In a case

the same kind of business by others and the entitled In the Matter of Pryor, decided by the natural laws will at once begin to operate. We Supreme Court of Kentucky (+1 Pac, Rep. 958), I fear that too often legislatures and other law..

water.

statutes.

making bodies are induced by peculiar ideas to shall have power to lay pipes, mains and conattempt legislation which is unfair to those who ductors for conducting gas or water through have risked money in some enterprise. In the the streets, lanes, alleys and squares in such Matter of Pryor the court said:

city, town or village, with the consent of the “The only question arising upon the record is municipal authorities thereof and under such whether the city of Iola had authority to fix regulations as they may prescribe.” Certainly the rates to be charged for natural gas furnished there is no express power conferred upon the to private consumers by Pryor & Paullin un municipal authorities by this section to regulate der the circumstances above stated. In this the price of gas or

Whether they country municipal corporations (except the might, as a condition of their consent, provide city of Washington) are the creatures of the that gas or water should be furnished to the States in which they are located. They derive city or to its inhabitants at not exceeding certheir powers from the Constitution and the tain prescribed rates, we need not now inquire.

In Anderson v. City of Wellington Consent was granted by Ordinance No. 268 to (40 Kan., 176; 19 Pac., 719) this court has the Iola Gas & Coal Company, its successors said: The power to pass a city ordinance must and assigns, without annexing any condition as be vested in the governing body of the city by to rates, except that no more than one dollar the Legislature in express terms, or be neces per 1,000 cubic feet of gas should be charged sarily or fairly implied in and incident to the for lighting the public buildings. In certain powers expressly granted; and must be essen cases the State may fix and regulate the prices tial to the declared purposes of the corpora- of commodities and the compensation for sertion; not simply convenient, but indispensable. vices, but this is a sovereign power, which may

Any fair and reasonable doubt con not be delegated to cities or subordinate subdicerning the existence of the power is resolved visions of the State, except in express terms, by the courts against the corporation, and the or by necessary implication. No such power power is denied.” (See, also, 1 Dill. Mun. Corp., | is expressly conferred upon cities of the third 4th ed., § 89.) The act providing for the class, and we do not think the right can be imorganization and government of cities of the plied from any express provision, unless possithird class contains no express grant or power bly that in the grant of consent to any person to fix or regulate the prices of gas, water or any or corporation to so use the streets and public other article of necessity or luxury. General grounds of the city a condition might be imauthority is given to enact ordinances for the posed as to the maximum rates to be charged. good government and welfare of the city (Gen. In Lewisville Natural Gas Co. v. State (135 St. 1889, pars. 958, 991), and such cities may Ind. 49; 34 N. E. 702), it was held that municiprovide for and regulate the lighting of streets, pal corporations of Indiana have no power at and they have power to make contracts with common law to fix by ordinance the price at any person, company or association to erect which natural gas shall be supplied to comgas works, with the privilege of furnishing gas sumers, and that the act of March 7, 1887, to light the streets, lanes and alleys of the city providing “ that the boards of trustees of towns for any length of time not exceeding 21 years and the common council of cities (Id., par. 984.) The respondent relies princi- shall have power to provide by ordinance reaspally upon a section of the Corporation law of onable regulations for the safe supply, distribu1868 relating to gas and water corporations, tion and consumption of natural gas within the and published as paragraph 1401, Gen. St., respective limits of such towns and cities," does 1889, which reads as follows: “Any gas or not confer the power to regulate the price at water corporation shall have full power to which natural gas shall be furnished; overruling manufacture and sell and furnish such the case of City of Rushville v. Rushville Naquantities of gas or

water as may be re tural Gas Co. (132 Ind., 575; 28 N. E., 853). quired by the city, town or village where In the opinion the court says: “ To secure the located, for public or

private buildings safe supply and use of natural gas is one thing, or for other purposes; and such corporations and to fix the price at which gas shall be sup

to

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