ties might be seized by adverse claimants, creditors of the testator's husband, assigned them to the defendant for the purpose of protecting them against such claimants and without any consideration for such assignments, with the understanding that the proceeds should belong to such estate; the defendant collected the insurance policies and received a portion of the proceeds of the collection of the bond and mortgage. The defendant set up the illegal purpose for which the transfer was made and claimed it as a defense to his keeping the money thus obtained; that the courts would not aid in a recovery because of this fraud. The court very properly held that an attorney by whose advice such a situation was brought about was not in pari delicto with the party whom he was influencing and that for this reason the rule he sought to invoke, to protect him in his fraudulent conduct, did not apply. They were not particeps criminis. In the face of such situations and their liability to arise, it is of the greatest importance that the courts should punish such conduct in the severest man

ner.

Another case which may be used to show our view, is that of Ford v. Harrington, 16 N. Y. 285, where an attorney on application of his client to know whether his equitable interest in certain land could be reached by his creditor, procured from his client an assignment of such interest for an inadequate consideration, promising to reconvey when he had settled with the creditor. Afterwards the attorney claimed to hold absolutely against his client.

It was held that although the object of the assignment was to perpetrate a fraud upon the creditor, yet on account of the relations existing between attorney and client, the attorney must be compelled to restore what he had acquired on being repaid what he had disbursed. We believe the court could have properly gone further and said that, because of the fraudulent conduct of the attorney in that case, he should return the property without reimbursement of the amount paid by the attorney for the equity, for there was a

willful attempt to defraud, amounting to malice, which would justify the exercise of the punitive force of the law.

NOTES OF IMPORTANT DECISIONS

SALES-FAILURE TO PERFORM EXECU TORY AGREEMENT WHICH IS PART OF CONSIDERATION.-In the recent case of Bland v. Wandel (Iowa), 114 N. W. Rep. 899, it is held that mere failure to perform an executory agreement which is part of the consideration of or the inducement to a sale is not in itself proof of fraud existing at the time of the sale.

Defendant wrote plaintiff that he had ordered a car load of flour elsewhere, which was un

satisfactory, and would cancel the order if plaintiff would accept the order for a car-load

on terms mentioned in defendant's letter. The order was accepted. Afterwards, plaintiff learned that prior to the giving of this order, defendant had placed a mortgage on his property in favor of intervenor. Defendant did not cancel the previous order for a car-load of flour as he had stated he would, and, having become involved, plaintiff brought replevin to recover the flour sold, setting up defendant's failure to rescind the prior order as a fraud. The court says:

"It is elementary that the mere failure to perform an executory agreement which is part

of the consideration or inducement to the mak ing of a contract of sale will not per se constitute such fraud as to authorize the subsequent rescission of the contract by the other party." Citing Van Vechten v. Smith, 59 Iowa, 173, 13 N. W. Rep. 94; State Bank of Indiana v. Mentzer, 125 Iowa, 101, 100 N. W. Rep. 69; State Bank of Indiana v. Gates, 114 Iowa, 323, 86 N. W. Rep. 311; Chicago, T. & M. C. R. Co. v. Titterington, 84 Tex. 218, 19 S. W. Rep. 472, 31 Am. St. Rep. 39. The court goes on to say that: "If it can be shown that when the inducing promise was made and a sale consummated in reliance thereon the buyer had a secret intention not to perform the obligation which he undertook to perform in the future, then this secret intention not to perform, in itself, constitutes such fraud as to warrant a rescission if the promise was relied on by the seller. and was a material inducement to the making of the sale. Cox Shoe Co. v. Adams, 105 Iowa, 402, 75 N. W. Rep. 316; Swift v. Rounds, 19 R. I. 527, 35 Atl. Rep. 45, 33 L. R. A. 561, 61 Am. St. Rep. 791; Donaldson v. Farwell, 93 U. S. 631 23 L. Ed. 993. But the fraud relied upon must have existed at the time of the sale; it can

CORPORATIONS-PAYMENT

FOR CAPITAL STOCK IN OVERVALUED PROPERTY. The subject of payment of capital stock of a corporation in overvalued property, and the consequent liability of the stockholder to the creditors of the corporation is discussed at length in Johnson v. Tennessee Oil, etc., Co. (N. J.), 69 Atl. Rep. 788. The suit was a creditors' bill brought by complainant on behalf of himself and all other creditors. Prior to bringing the suit a judgment had been recovered in the state of New Jersey, and execution having been issued was returned unsatisfied. The theory under which the suit was brought was that the capital stock was paid up in property grossly overvalued, and that the stockholders were therefore liable to the creditors of the corporation for the difference between the value of the property turned over to the corporation and the par value of the stock, or such proportion thereof as might be necessary to satisfy the claims of the creditors. The "trust fund" theory, as it is called, is examined by the court at great length, and the authorities reviewed. The "trust fund" theory of capital stock has in recent years become a fixed principle in the law of corporations. Under this theory, the capital stock of a corporation is a trust fund for the benefit of the creditors first, and then the stockholders. As is said in the principal case: "For a fraudulent use of the statutory and charter provisions by the issue of stock for property at a fraudulent overvaluation the holders of stock so issued would, however, remain subject to under liability to creditors, equitable principles generally referred to as The the 'trust fund' theory of capital stock. capitalization in this case was so grossly excessive as to be fraudulent, and the complainant would be entitled to relief on this ground of fraud but for the fact that he was a subsequent creditor, with full notice of the fraudulent overvaluation."

the

The rule is founded upon the supposed reliance of the Creditor upon the assets of the company as represented by its capital stock, it being held that a creditor dealing with a concern having a paid up capital stock of say, one hundred thousand dollars, has a

some

right to assume that the corporation has received one hundred thousand dollars in payment of such capitalization, either in money, or in money's worth. If, then, it develops that the directors and stockholders have bartered away the capital stock for some comparatively worthless consideration, as patent of unknown value, or oil leases, as in the principal case, or for tangible property which is not reasonably worth anything like the amount of capital stock issued in payment, the stockholders are liable at the suit of the defrauded creditor for the difference between what they have actually paid, and the par value of the stock received.

The question has frequently been raised as to the circumstances under which the stockholder may become liable, for example, whether he is liable if he has acted in good faith, and really believed that the property was of the value of the stock received. There is a strong tendency to hold the stockholder liable even where he has acted in good faith. In other words, the actual value of the property is the test, and good faith is no defense. Simons v. Vulcan Oil Co., 61 Pa. St. 202. On this point the Supreme Court of Missouri, in the case of Berry v. Rood, 168 Mo. 331, said: "When men are carried away by a mining prospect, they have a right to take such chances in speculation as they see fit in order to develop the prospect, provided they involve only themselves. But when they endeavor to hide their individual liability in a corporation and launch upon the business community a company which they proclaim as solemnly as men can proclaim anything, has a full paid capital of $300,000, and invite confidence accordingly, when they well knew that, so far as then developed, it has not 5 per cent of the amount available for use in the treasury, they violate both the letter and the spirit of our laws on this subject and render themselves liable to creditors who have been misled, to the extent of their unpaid capital stock." And, again, the same court, in Meyer's Case, 192 Mo. 189, said: "The property must be fully equal to the value placed upon it, and its value is determined by the fact and not by the opinions of the persons turning it over, even though they may have honestly believed it to be worth the amount certified."

In the principal case, the American trust doctrine is adhered to, but another principle defeated the complainant. He had knowledge of all the facts at the time he became a creditor. In fact, he was the attorney for the com pany, who engineered the deal, and the court holds, in line with the best authority, that as he had knowledge of the facts, he must stand in the position of any other creditor with notice. Equity does not grant this form of relief in these cases to those who know the

actual facts, or who are put on inquiry, and nevertheless extend credit. The case is one that will repay a careful reading.

CARRIERS-COMMENCEMENT OF RELATION OF PASSENGER AND CARRIER-DEGREE OF CARE.-It is held in Pere Marquette R. Co. v. Strange (Ind.) 84 N. E. Rep. 819, that the relation of passenger and carrier commences when a person with the good-faith intention of taking passage, with the consent of the carrier, express or implied, assumes the situation to avail himself of the facilities for transportation which the carrier offers. The plaintiff having entered the railroad company's premises for the purpose of taking a train in due course, and purchased a ticket entitling him to transportation between designated points, was, while approaching the train upon which he was to be carried, a passenger. This position is supported by numerous authorities cited by the court, among which are the following: 6 Cyc. 536; Citizens Street R. Co., v. Jolly, 161 Ind. 80; Freemont, etc. R. Co. v. Hagblad, 72 Neb. 773; Exton v. Central R. Co., 63 N. J. 356.

The proposition is laid down in this case that the degree of care required of a common carrier when a passenger is actually being transported is of the highest. It is held that the carrier is bound only for the exercise of ordinary care as to passengers who are not being actually transported but who are about the premises, station, platform, etc. The ruie is stated as follows:

Appellant does not deny that the relation of passenger had been established before and existed at the time of the accident in which appellee was injured, but a sharp conflict is waged as to the measure of appellant's duty to him as such passenger while approaching one of its trains. The common law, for the purpose of determining questions of liability for injury, divided passengers into two classes-(1) those being transported, and (2) those not being transported. The highest practical care and diligence were exacted of the carrier for the safety of passengers of the first class, and in case of injury resulting from defective roadbed, equipment, or management a presumption of the carrier's negligence was indulged by law in favor of the injured person. The carrier was bound only for the exercise of ordinary care with respect to passengers of the second class, and in case of accidental injury no presumption as to negligence existed in favor of either party. The common-law rule has not been rescinded or modified by statute in this state. The propriety and justice of the requirement that a high degree of care be exercised for the security of passengers of the

first class, and the sound public policy upon which the presumption of negligence in case of accidental injury to one of that class from defective roadway or equipment is founded, are manifest. A passenger being transported at a high rate of speed by powerful engines is helplessly in charge of the carrier, required to obey its regulations, and to rely for his safety wholly upon the foresight, care, and prudence of its agents. All of its ways, instrumentalities, and methods of operation are exclusively within its control, and the slightest omission or neglect with respect to any of these things is likely to be followed by frightful consequences. This court, appreciating the grounds upon which the rule was founded, has consistently held that when an injury is sustained by a passenger in transportation upon a railroad on account of the defective condition of roadbed, equipment, or management, the happening of the accident constitutes prima facie evidence of negligence on the part of the operating company, and devolves upon it the duty of establishing such facts as will exempt it from the imputation of negligence. Cleveland, etc., Ry. Co. v. Hadley (Ind.) 82 N. E. Rep. 1025; Pittsburg, etc., Ry. Co. v. Higgs, 165 Ind. 694, 76 N. E. Rep. 299, 4 L. R. A. (N. S.) 1081; Terre Haute, etc., R. Co. v. Sheeks, 155 Ind. 74, 56 N. E. Rep. 434; Cleveland, etc., R. Co. v. Newell, 104 Ind. 264, 3 N. E. Rep. 836, 54 Am. Rep. 312.

It is further argued that the special circumstances and risks attending the actual transportation of passengers do not exist with respect to passengers before entering or after leaving the coaches of such carriers. The perils which surround the passenger while around the platform, station, etc., are not different in kind from the peril encountered elsewhere. In other words, the passenger is able, to a considrable degree to look out for himself, but when on the train the passenger is peculiarly helpless, and absolutely dependent upon the carrier for his safety.

AGENCY-BURDEN OF PROOF-EVIDENCE.-In Rumble v. Cummings (Ore.), 95 Pac. Rep. 1112, it is held that where a party relies upon a contract, made with a person claiming to be an agent of another party, he must prove where the agency is disputed, that the person claimed to be an agent was expressly empowered by the person for whom he acted to make the agreement for him, and that the terms of the contract made were within the scope of the authority, conferred, or that the principal knowingly permitted the agent to assume that he had power to make such contracts, or held the agent out to the public as possessing such power, or that the

principal, with full knowledge of the agent's arrogation of power in making the contract, ratified the agreement, citing Hahn v. Guardian Assurance Co., 23 Ore. 576, 32 Pac. Rep. 683, 37 Am. St. Rep. 709; Jameson v. Caldwell, 25 Ore. 199, 35 Pac. Rep. 245; Connell v. McLaughlin, 28 Ore. 230, 42 Pac. Rep. 218.

One dealing with an agent must satisfy himself of the agent's authority except as above, and where agency is alleged it must be established by the party relying upon the agency.

THE ADVISABILITY OF A LONGER LAW SCHOOL COURSE AND OF A HIGHER STANDARD OF ADMISSION.

The writer has noted with some interest the recent article in the January issue of the Law Notes anent the two year course in Southern law schools.

The position seems to be taken in this paper that a two year course in law is self sufficient where the standard of admission is high enough.

In North Dakota at the State University a two year law course for the day students is maintained, and, although it can be truthfully said that as conscientious and industrious a body of students as could be desired by a lecturer there attend, nevertheless, it is quite apparent that the two year course is too short not only for the student, who is not a college graduate, but as well for the student who has received his Baccalaureate degree, for we have both classes of students in our law course.

We take it to be conceded, at least among our brethren, that there is no profession or calling which requires a broader or deeper fundamental knowledge than the profession of the lawyer. The various and diverse phases of life with which it deals necessarily requires this for the successful practitioner, so that to-day there is a universal demand and a general trend among the law schools of our country requiring a broader fundamental knowledge and a higher mental training on the part of the student who desires to pursue a law course.

We realize that this whole matter must

be considered from a practical, rather than a theoretical viewpoint with due regard to the actual results desired to be attained.

Thus, numerous instances can be cited where the student with some of the practical training of life, and without a collegiate training has far outstripped his brother student who is a college graduate, not only in grasping and comprehending the law, but also in the presentation of a more logical and receptive mind, and the same comparison can be drawn by individual citations of the lawyer without collegiate or law school training easily surpassing his opponent at the bar who has been equipped with both.

However, to-day the thought is generally accepted that a collegiate training offers the better and the quicker, the more scientific and the more logical way of equipping the student with the fundamental knowledge and the mental comprehension requisite for the study of the higher professions.

To no one is this statement more forcibly realized than it is to the lecturer in a law school who has in his classes, students, some who are college graduates, others who are without any collegiate training.

For, in the long run, the maintenance of a low standard of admission on the part of any law school simply means that, for those students who thereby secure admission to the curriculum of the law school course, just so much more time and effort must be spent by them, and in part, must be diverted from their law studies in order that they may be permitted to acquire that mental training and perceptiveness which will enable them to partially, at least, apprehend the work undertaken by them. But this is not all, for the burden is likewise thrown upon the instructor to spend that much of his time and effort as will give to this class of students the necessary fundamental enlightenment which must in many cases precede the apprehension of the legal study then being pursued, all of which shortens the time for the proper pursuit of the law work and retards the advancement of the

class as a whole. For it cannot be gainsaid that as full and complete a mental training is required for the apprehension of the law as for the comprehension of medicine or any other special branch of science.

Therefore, it is of primary importance that the standard of admission be made so high that the requisite preliminary training is first secured by the student: Otherwise, a law school must be a training school as well, unless it shall graduate students unprepared and ill fitted for their profession.

For without a high standard of admission the mere length of the law school course is no efficient criterion, comparatively, of the legal learning acquired by the student, though it be conceded that the relative merits of the corps of instrutors and the methods of instruction pursued by the same; since in one case where the students are without training it may well happen that a good portion of the time is taken in actual work of a training school, whereas in the other case, where the students have received a good preliminary training, more legal learning may have been imparted and received in the shorter course.

In fact, in the observation of the writer, it has occurred that a student with an excellent collegiate training has easily pursued and completed the three years' course of a certain Western law school in two years, and perhaps with less difficulty than many students complete the ordinary course in a law school whose term is two years.

It is apparent that the standard of admission for nearly all of the law schools of this country has been too low. This is admitted by the general efforts that are being made by all classes of law schools to raise the standard of admission, and by the further fact that something is being accomplished gradually in that direction.

However, the pertinent question in this respect is how the desired standard of admission can be attained.

The trouble very largely has been that a law school has been viewed by educators

and by the layman also, too much from the commercial standpoint; the question of numbers has been considered in preference to the question of quality. In some cases it has been considered a matter of pride that a named school is self supporting. The question whether the College of Arts is upon a paying basis is immaterial, but it is worthy of comment and of complaint, in fact, if a law school is not paying its way through its attendance.

In this light, of course, they are not treated as a necessary educational agency of the state, but rather, as an adjunct much the same as a commercial course or a conservatory of music, added to give prestige to the institution by the additions of numbers without any expense thereto attached.

With this view in mind, it is readily observable why the University of Chicago is able to insist upon and require a collegiate training as a pre-requisite for admission to its law school, irrespective of the small numbers that it may have in attendance at its school by reason thereof, and why other law schools in Chicago and elsewhere in the United States have not yet been able to attain this standard of admission.

What reason can be urged why the law school should not be viewed as an essential educational agency of the state?

Expensive and elaborate departments are maintained generally by state and other educational institutions whereby experts in the sciences, in literature and in the ancient and modern languages are trained at the expense of the state with little expense on the part of the post graduate who desires to take such courses. Here, however, a high standard of admission is required.

The navel cadet at Annapolis, the army cadet at West Point, each is arduously trained at the expense of the nation in order that he may be fully equipped for its defense and protection. Here, again, a high standard of admission is required.

The lawyer is an officer of the state. The laws which govern our human actions and relations are just as important to the state as the laws affecting inert bodies, as the