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in whose organic law the terms are incorporated; in this case a treaty would be the result of free negotiations, and the United States could not complain should Cuba, acceding to their conditions, insist upon trade concessions in return.
On the first hypothesis, a condition precedent is inserted in disregard of the letter of the Preamble, whereby the establishment of a government and the adoption of a specific organic law is the signal for our withdrawal. On the second hypothesis, the United States must leave the island without an agreement under which they can formally require the enforcement of their conditions. These will be merely inscribed in the organic law of Cuba, which, by itself, is an instrument that may be altered or disregarded without breach of contract. The constitution of a foreign country is not, as such, an object of lawful interest to the United States.
That the phrasing of the resolution permits this question. to be raised is a serious blemish in the document; but, however it be determined, the Eighth Article suggests another question of broad constitutional interest, and perhaps of practical importance, no matter which way the first shall be decided.
Is Congress competent to direct the President, and Senate to make a treaty ? Its authority to limit the executive discretion of the President in the matter of our withdrawal from Cuba, by prescribing its own conditions, is conceded. But the President, besides being the executor of the laws of Congress, is himself a legislator, for, with the advice and consent of the Senate, he is empowered to make treaties, which become, like the statutes of Congress, the law of the land. A statute may, indeed, deprive a treaty of all domestic obligation, but so may a treaty qualify a statute; and the courts, when required to decide between conflicting treaty and statute, will respect the later law. The treaty-making body and Congress being separate legislatures of equal rank, neither can compel the other to exercise its functions. Certainly the President and Senate cannot by treaty force Congress—we mean here the House of Representatives—to make the appropriation of money that may be necessary to effectuate it. Nor can Congress
force the President and Senate to make a treaty in accordance with its ideas, or prevent their making one in accordance with their own.
Applying this law of the Constitution in the present case, we find that should the Cuban Convention reject the terms of Congress, either flatly or by presenting modifications or explanations, and should Congress, through the opposition of the House of Representatives, decline to alter them, the President and Senate may still redeem our promise by way of a treaty. And we find further that the treaty contemplated by the Eighth Article, whether it be precedent or subsequent to our withdrawal, may be lawfully made without regard to the terms formulated by Congress. In short, while Congress has lawfully restrained the President from evacuating Cuba at his discretion, it has not prevented the treaty-making body from effectuating our withdrawal from the island at their discretion. And to appreciate the office of this body in regard to our relation to the Cuban Republic, we must bear in mind that every condition for which the sanction of contract is desired must be embodied in a treaty.
Whether the conditions now proffered by Congress shall be accepted or rejected by the Cuban Convention, they are not necessarily unalterable. It is difficult to see how, in any circumstances, our withdrawal from the island can be accomplished before the next meeting of Congress, and it is to be hoped that then our promise may be fulfilled by a single act—by a treaty which shall at once define and secure our conditions. The terms formulated in the Joint Resolution, which was linked to an Army Appropriation Bill and hurried through the last stages of a busy session, will then be scrutinized. Faithless and useless conditions will be dismissed, and our reasonable demands be definitely secured. A deliberate choosing of new terms may prolong our control in Cuba, but it is more important to withdraw in good order than to withdraw soon.
CARMAN F. RANDOLPH.
SET-OFF IN THE ADMINISTRATION OF IN
SOLVENT AND BANKRUPT ESTATES.
THE right of set-off has been extended in some instances
in the English and American courts of bankruptcy further than the recognized rules of legal and equitable setoff seem to justify. We propose to examine two classes of cases in which courts of bankruptcy have apparently diverged from the equitable rule, and to inquire whether, under the present bankruptcy law, the precedents in these cases should be further followed.
An instance of the extended application of the doctrine of set-off in bankruptcy is found in the leading case of Rose v. Hart,1 where the rule is laid down that a debtor to the bankrupt estate having in his possession property of the bankrupt with a present power of sale, though without a lien or other legal or equitable interest in the property, may after the bankruptcy sell the property and set off the proceeds against the debt.
This may be regarded as settled law in England,' and it is laid down by Judge Lowell as the law in this country under former statutes.3 This rule has a somewhat remarkable history.
In 1748 a case, In re Deeze, 4 came before Lord Hardwicke, in which he referred for the first time to the words “mutual credits ” introduced some years before into the bankruptcy law. These words were not found in the common law statute of set-off which was confined to “mutual debts.” In the case before Lord Hardwicke as reported, a packer claimed to retain goods, not only for the price of packing them, but the sum of five hundred pounds lent to the bankrupt on his note, and the Chancellor decided that 18 Taunt., 499; 2 Smith's Leading Cases, ioth Ed., 288. Robson's Bankruptcy, 10th Ed., 368; William's Bankruptcy, 7th Ed., the packer might not only hold the goods for the amount of his lien, but also for the amount of the independent debt for which he had no lien, placing his decision upon the meaning of the words “mutual credits.” Now, although the principle of set-off before its introduction by statute into bankruptcy, or at common law, had been applied in courts of equity, no case had then arisen or has since arisen in which set-off has been allowed in that court under circumstances similar to those which were before Lord Hardwicke, and his opinion as given by the reporter presents no argument in support of the extended meaning which he there appears to have given to the words of the statute.
* Lowell on Bankruptcy, 256. 4 1 Atk. 228.
Six years later the same question came before the same chancellor in Ex parte Ockenden, 1 apparently upon similar facts, but arising in a different trade. It then appeared that the earlier decision had been incorrectly reported and that evidence of a custom had been submitted in that case tending to establish a lien. With this fact added, the Deeze case was transformed. It was merely the case of a lien upon the bankrupt's property and did not involve the right of set-off or the construction of the words “mutual credits." The Chancellor accordingly held that it did not afford authority for the decision of the case then before him in which no such evidence of custom was produced, and he accordingly disallowed the set-off for the reason that if it were permitted, a lien would be created when none had previously existed. Notwithstanding this decision, the earlier authority was followed in a line of cases.
Thus in French v. Fenn, 3 the bankrupt, Cox, was indebted to Fenn and had intrusted him with his interest in a string of pearls to sell and pay over his share of the profits. Fenn sold the pearls after Cox's bankruptcy, and Cox's. assignee brought an action against Fenn for his share in the profits, to which Fenn set off the debt due from Cox. The set-off was allowed on the authority of In re Deeze, without reference to the later case of Ex parte Ockenden. So in Parker v. Carter, 4 where policies of insurance were
11 Atk., 235.
? See Lord Hardwicke's notes of the case printed in a note to Young v. Bank of Bengal, 1 Moore's P. C., 170.
3 1778, reported in Cooke's Bankruptcy Law, 5th Ed., 565. * Cooke's Bankruptcy Law, 5th Ed., 580.
would trust the balands of the statumutual cred mutual trthat the wornes extension doctrine, the
in the hands of a broker having no lien upon them, to whom the bankrupt was indebted, and a loss happened after the bankruptcy, the broker was permitted to set off his debt against the moneys collected by him on the policies, and in a similar case, Olive v. Smith, 1 in 1813, a like decision was reached. In neither of these cases was any reference made to the case of Ex parte Ockenden, and in Olive v. Smith, Lord Mansfield, commenting upon the author. ities and upon the doctrine, made use of the following language :
“The case of Parker v. Carter runs upon all-fours with the present case. The cases of French v. Fenn and Ex parte Prescott are also prodigiously strong. Some of those cases seem to have gone further than the words of the statute would clearly warrant, and say that wherever there is a mutual trust the balance only shall be paid. I should have thought that the words of the statute meant only money transactions; but if the extension of mutual credit be, as it has been contended, a mistaken doctrine, the mistake is so deeply rooted, it having been again and again confirmed, that it would be rash indeed to overturn it; and there is a great deal of justice in the determination, at which, not only the Court of King's Bench, but the Court of Chancery, have arrived on this point. It would be nugatory to put this in a course of further discussion, when every Court should say that the point had been determined again and again: the rule therefore must be discharged.”
Just what element of justice the eminent Chief Justice referred to can be inferred only from his use of the term “mutual trust" as implying that the loan had been made to the bankrupt in reliance upon the property left with the creditor as a means of payment. But the facts in the cases cited by him do not justify this assumption, and in the Deeze case it is recited that the goods were not delivered to the creditor until after the debt was incurred. In none of the cases is there reference to an understanding or agreement that the debt was to be paid out of the property, or the property applied to the payment of the debt. If such an agreement had existed, then the question would have been one of equitable or actual lien and in the absence of such an agreement, nothing seems to be added to the