editorial board/editorial notes
Embed Size (px)
NORTH CAROLINA LAW REVIEW
Volume 1 | Number 1 Article 6
Editorial Board/Editorial NotesNorth Carolina Law Review
Follow this and additional works at: http://scholarship.law.unc.edu/nclr
Part of the Law Commons
This Note is brought to you for free and open access by Carolina Law Scholarship Repository. It has been accepted for inclusion in North Carolina LawReview by an authorized editor of Carolina Law Scholarship Repository. For more information, please contact [email protected].
Recommended CitationNorth Carolina Law Review, Editorial Board/Editorial Notes, 1 N.C. L. Rev. 31 (1922).Available at: http://scholarship.law.unc.edu/nclr/vol1/iss1/6
North CarolinaLaw Review
Volume One JUNE, 1922 Number One
Editor-in-ChargeMAURICE TAYLOR VAN HECKE
Associate EditorsLUCIUS POLK McGEHEE PATRICK HENRY WINSTONATWELL CAMPBELL McINTOSH ROBERT H. WETTACH
Student EditorsSelected hy the Faculty for Excellence in Scholarship
CLARENCE G. ASHBY BENJAMIN BAILEY LIIPFERT NEAL Y. PHARRROBERT H. FRAZIER FRED B. McCALL RICHMOND RUCKERWADE A. GARDNER RALPH M. MOODY WILLIAM TOLMAN SHAWDAVID W. ISEAR CHARLES L. NICHOLS GRANBERY TUCKER
Published in November, January,. April and June, by The School of Law,The University of North Carolina, Chapel Hill
Two Dollars a Year Fifty Cents a Copy
EDITORIAL NOTESTHE Ravmw-It is hoped that this Ravmw
may be of service to the law students, thelaw teachers, the members of the bar, and tothe judges upon the bench, and, through them,to the people of the state.'
As a supplement to the routine daily classwork of the School, it -will afford to the sec-ond and third year students, a means of in-tensive training in legal writing. To them,the independent experience, under facultysupervision, in the analysis, investigation andcritical discussion of current problems inNorth Carolina law will be invaluable. Asthe REviEw goes into volumes year by year,it will constitute a collection of referencematerials on the local law, of definite value ascollateral readings in connection with classdiscussion.
To the faculty of the School, the REVIEwwill be an added incentive to systematic re-search in the state law and a medium for the
' For an interesting account of the possible usesof such a publication as this, see Herbert F. Good-rich, The Scope and Function of a State Law Re-giew, Proceedings, Association of American LawSchools, 1920, 157.
publication of the results achieved. To themembers of the bar and the judges upon thebench, the REvIEW will make available, in theform of leading articles, editorial notes andcomments, discussions of important legal prob-lems, statements of the significance of out--standing recent state and federal decisions,and historical accounts of the development ofdistinctive topics and doctrines of NorthCarolina law. In other words, the REviEwwill carry to the active members of the legalprofession, the work the School is doing intracing the development of law in NorthCarolina and in the country at large.
Of equal importance to the law student andto the law teacher, will be the opportunityafforded by the REvIEw to learn of the atti-tude, the needs, and the problems of theattorneys and judges in active practice. It ishoped that those who are daily carrying onthe litigation and the legal work of the statemay find in the ;rviaw a means of express-ing their reactions to, and their constructivesuggestions for dealing with, the difficultiesencountered in the practical administration of
THE NORTH CAROLINA LAW REVIEW
the law. Only through this closer contact andunderstanding can the lawyer, the judge, thelaw student, and the law teacher effectivelyunite in what should be a common effort forthe solution of modern legal problems. Inthis latter connection, namely, that of thepublic service of the legal profession as awhole, particular attention will be given inthe pages of the REVIEW to the influence uponlegal problems of matters of legislation, gov-ernment, business, and social and economicconditions.
THE SCHOOL OF LAw-The School of Lawopened its seventy-ninth year last fall withan initial registration of 113 students, thelargest in the history of the School.
The new three year course of study hasbeen in operation this year, with thirteen thirdyear students, thirty-three in the second yearclass, and sixty-seven in the first year class.A number of the courses formerly given havebeen considerably enlarged and extended, andnew courses have been offered in PublicUtilities, Trusts, Administrative Law, andPractice.
The faculty has been increased from fourto five full time teachers. The new positionwas filled in September, 1921, by the appoint-ment of Maurice Taylor Van Hecke, Ph. B.,J. D., as associate professor of law. Mr.Van Hecke did his undergraduate work atBeloit College and the University of Chicago,and received his legal training at the Universityof Chicago Law School. For a time, hepracticed law in Chicago, and then served forthree years as a member of the legal staff ofthe Illinois Legislative Reference Bureau.During 1920-21, he held the position ofassistant professor of law in West VirginiaUniversity. He has charge of the courses inPrivate Corporations, Equity II, Evidence,Use of Law Books, Public Utilities, andStatutes, and is editor-in-charge of THENORTH CAROLINA LAW RVIaW.
Assistant Professor Oscar Ogburn Efird,A. M. LL.B., resigned early last summer toenter private practice in Winston-Salem.The vacancy thus created was filled in Sep-tember, 1921, by the appointment of RobertH. Wettach, A. M., LL.B., S. J. D., asassistant professor of law. Mr. Wettach re-ceived his collegiate and professional train-ing at the University of Pittsburgh. Aftersome experience in the practice of law inthat city, he entered the graduate course inthe Harvard Law School, and received hisdoctor's degree from that school last June.He will give the courses in Criminal Law,
Persons, Negotiable Instruments, Agency,Sales, and Conflicts of Laws, and will havecharge of the Law Clubs.
The other three members of the facultyare well known to the North Carolina Bar.They are: Lucius Polk McGehee, A. B., who,as professor of law and later as Dean, hasbeen connected with the School of Law, withthe exception of one year, since 1904; Pat-rick Henry Winston, professor of law since1909; and Atwell Campbell McIntosh, A. Al.,who came to the School from Trinity Col-lege as professor of law in 1910. Mr. Mc-Gehee has charge of the courses in PropertyI and II, Constitutional Law, and Adminis-trative Law. Mr. Winston gives the coursesin Torts, Equity I, Partnerships, Wills, Insur-ance, Practice, and Trusts. Mr. McIntosh hasthe courses in Contracts, Common LawPleading, Equity Pleading, Procedure Underthe Code, Municipal Corporations, FederalCourts, and Bankruptcy.
In December, 1920, the School became amember of the Association of American LawSchools, an association of some fifty-six ofthe leading law schools in the United Statesand Canada, dedicated to the improvement oflegal education in America. The School wasrepresented at the December, 1921, meetingof the Association by Messrs. McGehee, VanHecke and Wettach. In February, 1922, Mr.McGehee represented the School at the Wash-ington Conference on Legal Education ofDelegates of State and Local Bar Asso-ciations.
The summer session of the School willopen June 15th and extend until just prior tothe bar examinations in August. The sum-mer faculty will consist of four of the regularmembers of the faculty of the School, and
'Associate justice Walter Parker Stacy, ofthe North Carolina Supreme Court.
The new home of the School of Law isdescribed elsewhere in this issue.
THE NEW LAW BUILDInG--By a happy co-incidence, the REvIEw is able to announce, inits first number, that before the end of theacademic year 1922-1923, the new Law Build-ing authorized by the last legislature will beready for occupancy. The School will go outof its present cramped and almost impossiblequarters with a profound sense of relief andsatisfaction. The present Law Building,though beautiful architecturally, is utterly in.adequate for the special purposes of theSchool. It can, however, be advantageouslydevoted to some other need of the University-perhaps to the theatre so earnestly desired
THE NORTH CAROLINA LAW REVIEW
by Professor Koch for the Carolina Play-makers. How wretched the present accomo-dations of the School and library are, howdisheartening the conditions of work havebeen, only those can realize who have strug-gled on with the existing equipment. It iswith the greatest gratitude and pride that theSchool sees before it a new era of improvedfacilities for work and usefulness.
As the goal of many years' exertions drawsnear, it may be of interest to put on recorda short statement as to the previous homes ofthe School. When the School was foundedby Judge William H. Battle eighty years ago,it was conducted in one of the offices in theyard of the present Battle house. At thattime the two offices, now both to the rightas one enters the yard, stood one on either sideof the entrance, and it was in the office onthe left that the School had its home from1843 until some years after the Civil War.When Dr. John Manning was elected to theprofessorship of law in 1881, he moved toChapel Hill and established his law office andthe Law School in the small building onHenderson Street, near the present post office,now occupied by the telephone exchange.The next home of the School was the roomdirectly opposite the main entrance on thefirst floor of the Old South Building. Itmoved into these quarters after Dr. Manning'sdeath in 1899, when the School was finallyand formally absorbed into the University.From this room it passed, about 1907, duringthe Deanship of Judge James C. McRae, tothe present Law Building, which had beenpreviously the University Library. Now atlast the School is to have a permanent homeadequate for its needs and worthy of its longhistory and the devoted part its alumni haveplayed in the development of the University.
The new Law Building will stand north-west of the Emerson Stadium, forming theeastern end of a quadrangle opening towardthe west, the north and south sides of whichwill be the new Social Science and LanguageBuildings. This group will occupy the placenow used for tennis courts south of the SteeleDormitory and the Gymnasium. With theSteele Dormitory and other buildings to beerected in line with that dormitory to thesouth, the Law, Social Science and Languagebuildings will ultimately form the easternside of the mall or avenue extending southfrom the South Building and designed to formthe central axis of the new campus.
The Law Building, facing toward the mall,will extend north and south about 140 feet
with a depth of 40 feet. The plans sholV animpressive and graceful building in thecolonial Georgian style of architecture.Looking at it from the front, the eye will bearrested by a portico rising the entire heightof the building, supported by six Ioniccolumns. The sky-line of the roof wilt bebroken by a colonial cupola. The outside ma-terial of the building will be brick finishedwith Indiana limestone. It will be built inthe fire-proof reinforced concrete type of con-struction, a matter of especial importance asit will be the permanent home of the lawlibrary.
The ground plan of the building will in-clude three parts; a central section 48 feetlong, and two wings each about 47 feet long.There will be a well lighted basement, abovewhich will rise two floors surmounted by amezzanine floor.
The basement, entered by the stairwaysdescending from the two ends of the entrancehall on the main floor, will contain, immedi-ately under the entrance hall, space for lock-ers for the students' books and coats. Underone wing will be a large room where thestudents may rest, without feeling that theyare in the way or obstructing work, whenthey are not attending lectures or working inthe library. The importance of this student'sroom is especially emphasized. It will relievethe upper parts of the building, lecture-rooms,library, reading-rooms, passages and hallsfrom noise and will help to develop anatmosphere of study and industry in connec-tion with the portions of the building devotedto serious work. It must be remembered, too,that the Law Building will be the exclusiveworkshop and home of the students from thetime that lectures begin in the morning untilthe building is closed at night, and the successof the School is dependent upon the atmosp~hereof professional study and discussion developedabout and associated with that building. Theother wing of the basement will be devotedto storage rooms and toilets.
Entering the main floor, the student will findhimself in an entrance hall, extending acrossthe front of the central part of the building,48 feet long, with a width of 24 feet. Ateach end of this will be stairways descendinginto the basement and rising upward to thelibrary floor. This hall will contain fourpillars supporting the library floor above. Be-hind this entrance hall, and occupying the re-mainder of the central section of the buildingwill be a lecture room for small classes, 48feet long by 15 feet wide. At each end of
THE NORTH CAROLINA LAW REVIEW
the entrance hall and opening into it will ba leture room about 46 feet by 40 feet.These rooms will be lighted by four largewindows in each side. There will be nowindows in the wall next the central sectionof the building, nor in the end opposite. Thisis so in order that neither the students northe instructor may have to face the lightdirectly. The lecturer's desk is placed at theinside end of the room. The rooms will befitted with concentric rows of seats, the backsof each row being provided with a shelf orsimple desk for the row behind, so that thestudent may have room to spread out beforehim his notebook and casebook or textbook.
The second floor, access to which is bystairways at the ends of the entrance hall,is given up to the library, reading rooms, andadministrative offices of the School, and to awoman's room with its necessary accessories.The space between the stairways on the secondor library floor will be devoted to the officeand desk of the librarian. From this centralposition the librarian will be able to seewhat is going on in the reading rooms and tomaintain a general supervision of the wholefloor.
The library floor is lighted by windows atthe sides and ends of the building and bysmall skylights. In the stack room the mainlight will be artificial. The ceiling height ofthe library, including the mezzanine floor,will be about 21 feet. One of the wings onthis floor will be devoted to the stack roomof the library. This will be fitted with steelstacks providing space, with the use of themezzanine above, for 25,000 volumes. Thestack room will be flanked on each side towardthe front and rear of the building with smalloffices for the accommodations of the Deanand for the administrative work of the School.This wing will also contain the woman'sroom, and toilet facilities for the instructorsand librarian.
Immediately in front of the librarian's desk,occupying the rest of the central section ofthe building will be a reading room 24 by 48feet. This room will not provide enoughspace for the necessary accomodations of in-structors, students and others, engaged instudy or research work in the library, but forsome years the space in the wing oppositethat used as a stack room will be devotedwholly or in part to a reading room and to aroom for the editorial work incident to theNORTH CAROLINA LAW REvIEW.
Ultimately, when it is needed, it is hopedthat the building as originally designed may
be completed. The original plan includes asemi-circular apse at the back of the centralsection of the building with a radius of 24feet. The first floor of this apse, added to thesmall lecture room on the main floor, of whichmention has been made,' will when completedprovide a large lecture room and assemblyhall for the entire School, suited for useeither as a class-room, a room for generallectures, or for other special occasions. Thesecond floor of the apse, added to the smallercentral reading-room will, when erected, affordan entirely adequate and well lighted readingroom for the library. This will release thesecond floor of the other wing, now to beused as a reading room, for additional stackspace for the library. It was found inadvis-able to construct this apse at the present time,but the plan of construction provides for itserection, when the growth of the School re-quires it. L. P. McG.
WIFE'S SEPARATE ACTION FOR PERSONAL IN-
JURY To HUsBAN--In Hipp v. Dupont,' theSupreme Court of North Carolina holds thata personal injury to the husband, caused bythe negligence of a third person, entitles thewife to maintain an action in her own namefor the consequent loss to her of the husband'sconsortium. As this is the first case in whichthis result has been reached, although thequestion has arisen in several other courts,the ground of decision ought to be carefullyexamined.
At common law, of course, no such ques-tion could arise or was conceivable. The wifecould not sue in her own name under any cir-cumstances, and if she could have sued andrecovered, the recovery would have inured tothe husband. Her position at common lawwas one of frank inferiority. Upon marriage,she not only lost the capacity to sue, but themarriage operated as an assignment to thehusband of her immediate property rights.
This state of things, however, has longpassed. By the doctrine of a "married wo-man's separate equitable estate," elaboratedduring the eighteenth century by the EnglishCourt of Chancery, the wife ftho enjoyed amarriage settlement was enabled to retainher own property free from her husband'scontrol. The nineteenth century, under theinfluence of a quickened perception of rightand social justice and a deepened feeling ofresponsibility for social wrong, worked forthe complete emancipation of woman and toraise her to a position of equality with man.
1182 N. C. 9, 108 S. E. 318 (1921).
THE NORTH CAROLINA LAW REVIEW
It was only just before the dawn of thatcentury in 1792, that her sense of wrong andher aspirations first found articulate ex-pression in Mary Wolstoncraft's Vindicationof the Rights of Women. But by the middleof the century, legislatures under the influ-ence of a deeping conviction, began to enactthe married women's acts now almost uni-versal, which gave her a legal title to herown property and a right to sue. Under thesestatutes, cases began to arise which requiredthe courts to re-examine the relation of hus-band and wife and the rights of the parties.The latest is the case under discussion.
In the Hipp case, the wife was allowed torecover for pecuniary losses sustained and ex-penses incurred, services rendered and main-tenance lost in consequence of the injury, andalso for mental anguish and loss of consor-tium. The court recognizes that the relationof husband and wife is now a relation of en-tire eqtiality; that technical obstacles to anaction by her have been removed, so that ifshe has a right she can assert it; and it findsin loss of consortium and the other lossesstated, a legal cause of action.
So far as her pecuniary losses are estab-lished, including mental anguish under therecognized doctrine in North Carolina, it ishard to see how any other result could bereached. These injuries appear to be thedirect result of the defendants wrongful act.
But a different question is presented withrespect to losses resulting to the wife be-cause her husband's weakened physical condi-tion rendered him less able to support her,and because his consortium was less satisfac-tory than before the injury. In his ownaction for personal injuries, he recovers or issupposed to recover complete indemnity forhis own decreased earning power, and thewife's loss (apart from definite pecuniary in-juries, nursing and extra expenditures) is .mere consequence of wrongs for which hehas received compensation, which is sharedin part by her. To allow her another separateaction would be to give a double recovery forone wrong. Her losses are remote and con-sequential. With regard to her husband'sconsortium, it is not the natural and probableconsequence of a physical injury to decreasethe society, companionship and affection be-tween the spouses; and loss which results to
See Whitcomb v. N. Y., etc., R. R., 215 Mass.440, 102 N. E. 663 (1913); Blair v. Seitner DryGoods Co., 184 Mich. 304, 151 N. W. 724 (1915);and rs to mental anguish, see Bailey v. Long, 172N. C. 661, 90 S. E. 809 (1916).
her can only be because the consorthuni ofwhich she is still in the enjoyment is lesssatisfactory and valuable than formerly. Itis remote and consequential. Such is thereasoning of the cases now to be considered.
Courts which have reached a conclusionopposed to the Hipp case and which deny aright of recovery in the wife for personalinjuries to the husband, for loss of main-tainance due to decreased earning power andfor loss of consortium, include the highestcourts of Massachusetts, Indiana, Ohio, Mary-land, and Missouri, and lower courts in newYork and Illinois. These cases, of which theleading case is the Feneff case, postulate, asdoes the Hipp case, the equality of hus-band and wife and her right to sue. Butrecovery is denied as opposed to two funda-mental rules of law: separate recoveries fora single cause of action, and recovery for re-mote and consequential damages. Two linesof precedents were considered in these cases.In one, married women were allowed damagesfor direct and intentional invasions of theirrights to the consortium of the husband, suchas actions for criminal conversation with thehusband or for alienating his affections. Ac-tions for injuries to consortium of this typeare recognized in all jurisdictions." Theother class of precedents consists of those al-lowing the husband to recover consequentialdamages for loss of consortium arising frompersonal injuries negligently inflicted on thewife. This was an old common lav action.
Under the modern doctrine of equality ofhusband and wife does such an action stillexist? This is crucial. If recognized as ex-isting for the husband, it ought to exist forthe wife; if it is not recognized in favor ofthe wife, no such action should exist for thehusband. In considering the question, actionsfor intentional direct invasion of consortium
3Feneff v. N. Y. Cent., etc., R. R. Co. 203 Mass.278, 89 N. E. 436 (1909); Gearing v. Berkson 223Mass. 257, 111 N. E. 785 (1916); Brown v. kitle-man, 177 Ind. 692, 98 N. E. 631 (1912); Smith v.Nicholas Building Co., 93 Ohio St. 101 112 N. E.204 (1915); Emerson v. Taylor, 133 Rd. 192, 104At. 538 (1918); Bernhardt v. Perry, 276 Mo. 612,208 S. W. 462 (1919); Uoldman v. Cohen, 30 Misc.(N. Y.) 336 63 N. Y
. S. 459 (1900); Potelski v.Snyder, 179 ill. App. 24 (1913).
' Nolin v. Pearson 191 Mass. 283, 77 N. E. 890(1906); Turner v. i-eavrin, 182 Ky. 65, 206 S. W.23 (1918). In both of these cases the authoritiesare collected and examined. In North Carolinasuch action is recognized. Brown v. Brown, 124N. C. 19, 32 S. E. 320 (1899). Action for wilfullyand knowingly selling morphine to the husband, adrug addict, has been held within this principle.Flandermeyer v. Cooper, 85 Ohio St. 327, 98 N. E.102 (1912).
5 Grey v. Livesay, Cr. Jac. 501 (1619); subnow.Grey v.-Lusq, 2 Rlle 551.
THE NORTH CAROLINA LAW REVIEW
have no bearing,' since as has been seen,direct intentional invasion is generally recog-nized as giving a cause of action.
In many jurisdictions, the common lawaction in favor of the husband is still recog-nized; in most courts, perhaps, in deferenceto precedent.' But according to a wellreasoned series of recent cases, such an actioncan no longer be maintained by the husband,for the same reasons which prevent the wiferecovering under similar circumstances.'
In Blair v. Seitner Dry Goods Co., supra,it was held, following the Feneff case, thatthere could be no recovery by the husband formere loss of wife's consortium (affection,companionship and marital society), throughnegligent personal injury to her, merelyrendering her society less valuable and satis-factory; but recovery was allowed for definiteand ascertainable pecuniary loss for serviceshabitually performed. Of course, like thewife, he may maintain an action for directintentional invasion of the consortium, suchas criminal conversation or alienation of affec-tions.
The correctness of the reasoning of theopposing cases depends, not assuredly as sug-gested in the Hipp case on the common lawdoctrines of merger of wife's identity and herincapacity to sue, or on the recognition of aright to consequential damages in the husbandnot allowed to the wife. Nor does it dependon a "clinging to consuetudinary law after thereason for the custom has ceased," becausethese cases are founded on a thorough andcareful attempt by able courts to apply thenew idea of equality to the marital relation.The real ground for divergence of opinion is
'Thus, Flandermayer v. Cooper, supra, beingspecifically based on direct invasion of consortium.So, too, Holleman v. Harward, 119 N. C. 150, 25S. E. 972 (1896), (husband allowed to recover foidamages for sale of drugs to wife, an addict).These cases are relied on in Hip pv. Dupont. SeeJaynes v. Jaynes, 39 Hun (N. Y.) 40 (1886),(wife's action for alienation of affections), also re-lied on in Hipp case.
' Mageau v. Great Northern R. R. Co., 103 Minn.290, 115 N. W. 651 (1908); it is recognized inNorth Carolina; Kimberly v. Howland, 143 N. C.398, 55 S. E. 778 (1906); Bailey v. Long, supra.In commenting on these North Carolina cases inthe Hipp case, the court distinguishes the right ofrecovery of the husband for the wife's earnings,in case of injury to her, of which statutes have de.prived him, and for the loss of the companionshipof his wife, which is "a loss purely personal tohim and the direct consequence of the wrong ofthe defendant." The consequential character of theloss as already involved in the husband's right ofrecovery is of course denied. See also Guevin v.Manchester St. Ry. Co., 78 N. H. 289, 99 Ad. 298(1916).
sMarri v. Stamford St. Ry. Co., 84 Conn. 9, 78Atl. 582 (1911); Bolger v. Boston El. R. Co., 205Mass. 420, 91 N. E. 389 (1910); Whitcomb v. N. Y.etc. R. Co., 215 Mass. 440, 102 N. E. c663 (1913).
whether the recognized common law principleof remoteness of damages is applicable.
The Hipp case says: "Our precedentsestablish that such damages are not remotefor the husband, and on parity of reasoningthey are not remote for the wife."
The opposing cases say: "Such damagescan be recovered by neither spouse. To allowthe wife to recover for merely consequentialunintentional losses resulting from negligentinjury to the husband is opposed to theprinciple refusing consequential and remotedamages and is not supported by any analo-gous line of cases. Old precedents allowingthe husband to recover for injuries to the wifeavail nothing, as they are founded on a bar-barous exploded theory of the husband's own-ership of the wife at a time when she wasconsidered an inferior." L. P. McG.
RESALE PRICE MAINTENANcE-The Beech-Nut Case was brought to the Supreme Courtof the United States on certiorari proceedingsfrom the Circuit Court of Appeals, the ques-tion at issue being the authority of the Fed-eral Trade Commission under sec. 5 of theFederal Trade Commission Act, to order theBeech-Nut Packing Co. to desist from carry-ing out a certain sales policy whereby standardprices were maintained on its products in thehands of dealers at wholesale and at retail. '
From the agreed statement of facts pre-sented to it, the Court selected the followingfor mention in its review of the case: TheCompany refused to sell its products to thosewho did not maintain the resale prices sug-gested by it. It also refused to sell to thosewho sold to others who had failed to main-tain those suggested prices. It refused tosell to mail-order houses, or to dealers whosold its products to mail-order houses. Itemployed "specialty salesmen" who solicited"turn-over orders" directly from retailers,but permitted such orders to be filled only bywholesalers who maintained the prices. Itreinstated distributors previously cut off uponpromises and assurances that they would sup-port the company's price policy. New dis-tributors were added to the list only uponsimilar assurances. In addition, the Companyutilized a system of key numbers or symbolsmarked upon the cases of "Beech-Nut BrandProducts," so that in the event of priceirregularities, the identity of the offendingdealers might readily be traced. It also main-tained card records "containing the names ofthousands of jobbing, wholesale and retail
% Federal Trade Commission v. Beech.Nut Pack.ing Co. 42 Sup. Ct. 150 (1922).
THE NORTH CAROLINA LAW REVIEW
distributors, and . . . . listed upon those cards.... the words 'Undesirable-Price Cutters,''Do Not Sell,' . . . . or expressions of a likecharacter, to indicate hat the particular dis-tributor was in the future not to be suppliedwith respondent's goods on account of failureto maintain the suggested retail prices ....Additional card records x'ere kept of 'select-ed' distributors."
The decision of the Court, while sustainingin general the "cease and desist order" of theFederal Trade Commission, nevertheless, doesnot in any way impair the right of the com-pany to refuse to sell its products to any onewhomsoever, or its right to determine thecircumstances under which it will sell or de-cline to sell.
Some of the critics of the case have ex-pressed inability to take the above view of itseffect, and have maintained that the Courtin pronouncing the "Beech-Nut Policy" illegal,has taken a position inconsistent with thattaken by the same tribunal in other recentcases involving similar issues. It has beencontended that the agreed statement of factsupon which the decision was based broughtthe case within the Colgate Case, discussedlater in this note, but that the Court arrivedat an opinion adverse to the Colgate decisionwithout overruling it or questioning it, or"recognizing any inconsistency in the twopositions."' Elsewhere, it is stated, follow-ing a generally adverse criticism of theCourt's opinion, that "In effect, the Court hasnullified a desirable exception to a question-able rule," the "questionable" rule by impli-cation being that laid down in the ColgateCase relative to the right to refuse to sell!
Reply to these criticisms will best follow asummary of prior cases involving price main-tenance as the major issue.
In the case of Dr. Miles Medical Co. v.John D. Park and Sons Co.,' it was held thatspecific contracts between manufacturer anddealers to maintain certain resale prices wereunenforceable on grounds of public policy.The theory of the Court then expressed, andsubsequently adhered to, was: "The com-plainant having sold his products at pricessatisfactory to himself, the public is entitledto whatever advantage may be derived fromcompetition in the subsequent traffic."
In Bauer v. O'Donnell,' the famous "San-atogen Case," the question at issue was:
231 Yale L. 3. 653.3 35 Harv. Law Rev. 772.4220 U. S. 373, 31 Sup. Ct. 376 (1911).'229 U. S. 1 (1913).
May a patentee by notice limit the price atwhich future retail sales of the patented ar-ticles may be made, such article being in thehands of a retailer by purchase from a jobberwho has paid the agent of the patentee thefull price asked for the article sold? TheCourt in its negative answer reiterated thedoctrine of the former case.
A still different type of attempt to coercedealers into acceptance of standard resaleprices, by use of a so-called "license notice"was frustrated by the Court in Straus v.Victor Talking Machine Co.' In a con-temporaneous decision concerning motion pic-tures, the averseness of the Court to the ideaof the manufacturer's control over hisproducts, after their sale, goes so far as toachieve a complete overthrow of the well-known Dick Case,' until that time one ofthe legal main-stays of attempted price con-trol by patentees.
The next case to come before the Court,Boston Store of Chicago v. American Grapho-phone Co' is of interest because of its com-prehensive review of the legal doctrines in-volved in price maintenance contracts. Rela-tive to the question before it, the Courtsaid: ". . . . There is no room for contro-versy concerning the subjects to which thequestions relate, as every doctrine which isrequired to be decided in answering the ques-tions is now no longer open to dispute . .. ."
It was at this juncture, when the prohibitionof resale price maintenance seemed well es-tablished and when the proponents of resaleprice maintenance seemed c~nvinced that noremedy was available for them except "thecurative power of legislation," that reliefapparently arrived in the form of the ColgateCase.
In the bill of indictment, the Colgate Co.was charged with having attempted to main-tain resale prices through the method of re-fusing to sell to price-cutting dealers, the re-fusal-to-sell action being in accordance withpreviously published announcements to thateffect. No mention was made in the indict-ment of contracts with dealers, express orimplied, or of any "follow-up" system de-signed to discover and report non-complyingdealers. In a later reference to this case, thecourt declared that, "the only act charged
e243 U. S. 490 (1917).I Motion Picture Patents Co. v. Universal Film
Manufacturing Co., 243 U. S. 502 (1917); Henry v.Dick Co. 224 U. S. 1 (1912).
'246 U. S. 8, 38 Sup. Ct. 257 (1918).9 U. S. v. Colgate Co., 250 U. S. 300, 39 Sup.
Ct. 465 (1919).
THE NORTH CAROLINA LAW REVIEW
amounted to the exercise of the right of thetrader or manufacturer . . . .to exercise hisown discretion as to those with whom hewould deal, and to announce the circumstancesunder which he would refuse to sell." '0 TheCourt was emphatic in declaring the conduct,as thus described, legitimate. Moreover, ittook occasion later, in the cases of U. S. v.Schrader's Son, Inc.,' and Frey & Co. v.Cudahy Packing Co.,' to reaffirm its legality,although each of the latter cases involvedrefusal-to-sell methods which were pronouncedillegal. The distinction lay in the existenceof implied agreements.
The above cases constitute the legal back-ground of the Beech-Nut Case. They clearlyforeshadowed defeat for the Beech-Nut sell-ing methods as described in the beginning ofthis discussion, unless the Company's methodscould be established as identical with thoseof the Colgate policy. However, the Courtproperly refused to admit any such identity,holding that the respondent's plan of mark-eting while including the practices of theColgate Co., yet went much further in thatit utilized a closely-knit and effectively ap-plied follow-up system in connection with itsselling, in which jobbers, retailers, and theagents of the company participated. Inshort, it was an elaborate espionage systemin which an army of individuals both in andout of the employ of the Beech-Nut PackingCo. were under pressure to observe and to re-port to the Company, each upon the actions ofthe others. If coiperative action of this typeis not to be regarded as conspiracy in restraintof trade and therefore an unfair method ofcompetition within the meaning of see. 5 ofthe Federal Trade Commission Act, then con-spiracy has no meaning in American busi-ness law.
To any one familiar with the problems andintricacies involved in the competitive mark-eting of manufactured goods, it is incompre-hensible that the rule of free choice of cus-tomers as pronounced in the Colgate decisionshould be regarded as a "questionable rule."The only alternative to such a rule in prac-tice would be compulsory sales to whomso-ever would buy, which would preclude thepossibility of manufacturer selecting his ownchannels of commodity distribution. Freechoice of the agencies of distribution is es-sential in many instances to efficient market-
0 Reference in Beech-Nut decision, 42 Sup. Ct.150 (1922).u 252 U. S. 85, 40 Sup. Ct. 251 (1920)."256 U. S. 208, 41 Sup. Ct. 451 (1921).
ing for reasons wholly outside price-main-tenance considerations.
The doctrine as laid down in the Beech-Nut Case, far from being an undesirable ex-ception to the above rule, is neither an ex-ception nor undesirable. It does not limitthe choice of customers, but merely invali-dates certain designated methods of procur-ing the information upon which the choice ismade. The fact that certain manufacturersfind it difficult to procure the desired informa-tion without the use of the prescribed meth-ods is wholly aside from the question. Thesame objection may be directed against theillegality of any procedure which stands inthe way of easy accomplishment of an endlegitimate in itself.
From the economic point of view, thaBeech-Nut decision has made the legal statusof price maintenance more equitable." Hadthis case been brought within the scope ofthe Colgate ruling, it would have created asituation in which only the more powerfulof specialty manufacturers could have effect-ed price control, for only this type couldafford the elaborate and broadly-based follow-up system of espionage and reporting requi-site to success. Admittedly, the law is notpresumed to be cognizant of the mere sizeof a business, unless monopoly is attained orattempted. But in the eventuality above sug-gested, business men would have faced thefact that every known method of attainingprice maintenance would have been by courtruling made illegal, except the one methodwhich is effective only in the hands of thelargest interests. The application of theColgate rule to the Beech-Nut Case would atonce have rendered farcial all prior rulhigsof the Court relative to resale price main-tenance contracts. It would have been tanta-mount to legitimatizing the use of BigBerthas in war while forbidding the use ofone-pounders.
At present all manufacturers may be saidto occupy the same position as regards thepractical as well as the theoretical aspectsof resale price maintenance. Price control tothe extent of preVenting the extreme instancesof price-cutting in the main still remainswholly feasible. Price control in its mostrigid form has been rendered virtually im-possible, an end highly desirable economi-cally." The principle of freedom of choice
3?Cf. Kales, Contracts and Combinations in Re-straint of Trade.
"For the economic aspects of price mainten.ance in detail, see Murchison, Resale Price Main-tenance (1919), Columbia University Studies inPolitical Science, Vol. 82, No. 2.
THE NORTH CAROLINA LAW REVIEW
in the selection of customers, than which noprinciple of business law should be regardedas more sacred, has been wholly preserved,and at the same time rendered comparativelyfree from abuse by elimination of certainaccessory devices in themselves "repressive andcontrary to public policy."'
C. T. MURCHISONAssociate Professor of Business Economics,
University of North Carolina
DIMINUTION OF JUDGES' SALARIES BY ANINCOME TAX-The Constitution of NorthCarolina 1 provides that "the salaries of thejudges shall not be diminished during theircontinuance in office." Similar provisions arefound in the federal Constitution and in theconstitutions of many of the states. Underthese clauses the question has arisen whetherthe government is prohibited from applying ageneral income tax to the salaries of judges.One view is that such a tax does not'diminishthese salaries within the meaning of the Con-stitution, but that it constitutes merely ameans of distributing the cost of the govern-ment equally over the general mass of citi-zens. On the other hand, the proposition thata general income tax is inapplicable to judicialsalaries under a constitutional provisionagainst diminution is strongly upheld in mostjurisdictions.'
The first view suggested was adopted in anearly Pennsylvania case, and has recently re-ceived support in Wisconsin." The strengthof the first case, is of course, somewhat im-paired by the briefness of the opinion and bythe fact that no authorities are cited in sup-port of its holding. And it was virtuallyoverruled by a later case in the same juris-diction.' Probably the ablest presentation ofthe view that a general income tax does notdiminish the salaries of the judges within themeaning of the constitution, is found in thedissenting opinion of Mr. Justice Holmes in
1 Cf. Brown, The Right to Refuse to Sell, 25Yale L. J., 194.
1 Art. IV, see. 18.2 It should be borne in mind that the proposition
under discussion has no direct connection with theproblem as to whether a state may tax the salaryof an officer of the Federal Government, and viceversa. The solution of that problem depends uponthe considerations of policy involved in one sov-ereignty taxing the agencies of another and notupon the interpretation of such a constitutionalclause as that herein involved. See Collector v.Day, 11 Wall. 113 (1870); Purnell v. Page, 133N. C. 125, 45 S. E. 534 (1903); and Gillespie v.Oklahoma, - U. S. - , 66 L. ed. 211 (adv.ops., 1922).
" Commissioners v. Chapman, 2 Rawle (Pa.) 73(1829); State v. Nygaard, 159 Wis. 396, 150 N. W.513 (1915).
4Commonwealth ex. rel. Hepburn v. Mann, 5Watts & Serg. 403 (1843).
the recent case of Evans v. Gore,5 in theSupreme Court of the United States. It isthere suggested that the salaries of federaljudges are, for two reaqons, subject to a gen-eral federal income tax. In the first place, itis said that the clause in the federal Constitu-tion was intended to secure the independenceof the judges from legislative coercion, andthat to require them to pay the same incometaxes that all other men have to pay, couldnot possibly influence their judicial action.Moreover, it was felt to be unnecessary toexempt the official salaries of judges as suchfrom taxation, while that part of thosesalaries which has been converted into otherforms of property is made taxable.' In thesecond place, the dissenting opinion urged, ascannot be said in the state cases, that theSixteenth Amendment, which provides for thetaxation of incomes, "from whatever sourcederived," authorizes the subjection of judicialsalaries to a general income tax, and that themajority view on this phase of the case dis-regards the probable significance of thatclause. '
The view, however, that judicial salariesare not taxable under these diminution pro-visions is supported by the great majority ofthe decided cases.' The argument for thisposition is that the power to tax is the powerto destroy, and that even the upholding of theapplicability of a relatively small and gen-eral income tax might become a precedentfor a more direct and coercive measure. Thefirmness with which that Iosition is main-tained is emphasized by the fact that noteven the apparently explicit language of"from whatever source derived" in the Six-teenth Amendment was sufficient to overcomeit. The answer to this contention is that thesustaining of the applicability to judicialsalaries of a general income tax could notin the nature of things later preclude thecourt from nullifying an actually harmfultax, one that does come within the purviewof the Constitution, and that there will betime and opportunity enough to grapple withthat situation when it arises.
In North Carolina, the attitude that judicialsalaries are non-taxable has long been prev-alent, although it should be noted that here-tofore the Court has not as such rendered an
5253 U. S. 264 (1920).6 See 30 Yale L. 3. 75.1 See 34 Harv. Law. Rev. 70.8 See Evans v. Gore, 253 U. S. 245 (1920); New
Orleans v. Lea, 14 La. Ann. 197 (1859), and casescited in State v. Nygaard, 159 Vis. 396, 150 N. V.513 (1915).
THE NORTH CAROLINA LAW REVIEW
opinion on the question, but has simply re-lied upon opinions submitted by the stateattorneys-general. In the recent NorthCarolina case of Long v. Watts,"5 the ques-tion was again presented whether or not ageneral income tax is a diminution of thejudges' salaries within the constitutional pro-hibition. One of the state Superior Courtjudges brought an action to restrain the statecommissioner of revenue from collecting anincome tax on his official salary, alleging theinvalidity of such an application of the incometax act of 1920.' The defendant contendedthat since the constitutional amendment of1920 regulating the rate of income taxes andthe exemptions therefrom, the official salariesof judges were subject to taxation."
In an unanimous and somewhat vigorousopinion the Court held that although theprivate incomes and property of judges aresubject to taxation, their official salaries areexempted. The decision is supported by theclear weight of authority. As an originalquestion, however, and in view of the pur-pose of the constitutional provision and theconsiderations suggested by Mr. JusticeHolmes, the result would be unnecessary.
N. Y. P.
BANK'S LIABILITY FOR PAYMENT ON UN-AUTHORIZED INDORSEMENT OF PAYEE'S NAME.-A recent North Carolina case raises aquestion as to the liability of a bank for pay-ment of a check on an unauthorized indorse-ment of the payee's name." The facts wereas follows: A owed C $1,000. A told Cthat if the latter would loan him $3,000, hewould repay the $1,000, and give as securitya deed of trust on his sister B's land. Thiswas agreed to. C made the check payable toB, whose name purported to be signed to thetrust deed, and delivered it to A, whereuponhe indorsed it "B by A," and deposited it tohis own credit in the defendant bank. Later, Apaid C the original debt by check on hisaccount. B had no notice or knowledge ofthe transaction. C, upon discovering the
Opinion of Attorney General Batchelor, 48 N. C.,Appendix. p. 544 (1856); Opinion of AttorneyGeneral Walser N C. Pub. Doc., (1899) p 95; InRe Taxation of Salaries of Judges, 131 1. C. 692,42 S. E. 970 (1902).
'5 110 S. E. 765 (N. C. 1922).P. L., 1921, Ch. 34.
"Constitution of North Carolina Art. V, sec. 3.The effect of this amendment was simply to removethe prohibition against taxing incomes derived fromproperty already taxed, to limit the maximum rateof taxes upon incomes to 6 percent thereof, and tospecify certain exemptions.
I McKoughon v. Merchants Bank and Trust Co.,182 N. C. 543, 109 S. E. 355 (1921).
fraud, seeks to hold the bank for payment ofthe check on the unauthorized indorsement ofthe payee's name. Held, plaintiff could re-cover the difference between the face valueof the check and the amount repaid to himby A.
A drawee bank is liable for payment onthe forged indorsement of a payee's name.'It cannot charge the amount so paid to thedrawer's account, unless the latter has beenguilty of negligence causing the payment. Itmay disburse only in conformity with thedrawer's directions.' Likewise, when adrawee bank pays a check indorsed by anagent, it must assure itself of his authorityat its peril.' Such authority may of coursebe implied as a necessary incident to an actualagency The Negotiable Instruments Act'provides that no right can be acquired under asignature made without the authority of theperson whose signature it purports to be,"unless the party against whom it is soughtto enforce such right is precluded from set-ting up the want of authority." The right ofaction in this connection inures to the drawerand not to the payee, because the check neverbecomes the property of the payee.'
When the drawee bank complies with theinstructions of the drawer, it will be pro-tected. So where A, representing himself asB, obtains an instrument payable to B, thedrawer intends the person before him to bepayee, although he erroneously supposes thatperson to be B.' Personal presence is asurer means of identification than a name.9Thus, the bank, having followed the drawer'sdirections, should not be liable to him." Butwhere A, representing himself as B's agent,obtains an instrument payable to B, notldngelse appearing, the drawer does not intend tomake A payee, nor to authorize A to indorse."Here, the name is the only basis for identifi-cation. Therefore, the bank will be liable for
2 Shipnzan v. Bank of State of New York, 126 N.Y. 318, 27 N. E. 371 (1891); Yarborough v. TrustCo., 142 N. C. 377, 55 S. E. 296 (1906).
See 22 Harv. Law Rev. 605.'2 Bolles, Modern Law of Banking, 730; Bank
v. Hay, 143 N. C. 3?6, 55 S. E. 811 (1906)."Where one merely professes authority to in.
dorse, which in fact does not exist, it is not forgery.1 Mechem on Agency, 2nd ed. 266.
0 C. S., sec. 3003.tFirst National Bank of Chicago v. Pease, 168
IIl. 40, 48 N. E. 160 (1897).8See 14 Harv. Law Rev. 60. Elliott v. Smith.
erman, 19 N. C. 338 (1837). See 50 L. R. A. 75,note.
'Robertson v. Coleman, 141 Mass. 231, 4 N. E.619 (1886).
"Land Title and Trust Co. v. NorthwesternNational Bank, 196 Pa. St. 230, 46 Atl. 420 (1900).
"See 15 Harv. Law Rev. 152.
THE NORTH CAROLINA LAW REVIEW
payment on an unauthorized indorsementthereof.'
The principal case, quite anomalously, par-takes of the essence of both of thesesituations. A represented himself to C as theagent of B. But, as a matter of fact, C in-tended that A should receive the proceeds ofthe check. C was making the loan to A, andat his request. C looked to him for paymentof the prior loan from those proceeds, anddelivered the check to him, payable to B,without any reference to his authority asagent. It seems this was but a nominal useof B's name in the nature of a fictituouspayee." Would payment to A on his unau-thorized indorsement of B's name be a com-pliance with the drawer's intention and direc-tion? To distinguish this from payment toA where he has represented himself to C asB ", is a close refinement. Where the draweepays on an unauthorized indorsement and theproceeds find their way back to the drawer,the former is not liable as for a wrongfulpayment; the drawer is not damaged by thepayment1 Likewise, where money gets intothe hands of him whom the drawer intendedto designate as payee. 1" It is submitted thatthe same rule should prevail when the moneygets into the hands of him whom the drawerintended to receive it.' T The indorsementand payment accord with the intention of thedrawer, and he might be estopped to complainthat he was injured thereby. It seems that inthe principal case the court should at leasthave weighed these considerations against thedrawee's negligence in paying on an un-authorized indorsement.
Moreover, it seems arguable that underthe particular circumstances here, the checkwas payable to a fictitious payee." Section2990 of the Consolidated Statutes of NorthCarolina, provides, inter alia, that a check ispayable to a fictitious payee when "it is pay-able to the order of a fictitious or non-exist-ing person, and such fact was known to theperson making it so payable." This sectionstates the well settled rule that the intentionof the drawer determines the fictitious
"Armstrong v. Poineroy National Bank, 46 OhioSt. 512, 22 N. E. 866 (1889).
1z See note 16, post.14 See note 7, supra."3Andrews v. Northwestern National Bank, 107
Minn. 196, 117 N. W. 621 (1908).1" See 14 Harv. Law Rev. 60.11 See Banks and Banking, 7 C. J. Secs. 400, 414."Such check would be payable to bearer. C. S.
character of the payee." Where the payeeis a stranger to the transaction, and has nointerest therein, it has been held that he maybe regarded as a nonentity.' If the name ofthe payee represents the real person entitledto receive the amount of the check, and thedrawer intends that the check should be de-livered to the real payee and should not gointo circulation otherwise than through de-livery to and indorsement by the payee named,then, the payee is not fictitious." The ficti-tious character of the drawer's direction to paydoes not depend upon the identification of thepayee named with some existent person, butupon the intention underlying the act of thedrawer in inserting the name. ' It seemsarguable that the drawer in the principal casedid not intend B to be the real payee.
The principal case allowed the drawer to re-cover, but restricted the amount to the differ-ence between the face value of the check andthe amount repaid to him by A. It seemsthat when A wrongfully obtained the moneyfrom defendant bank to pay C, he became aconstructive trustee thereof for the bank."When C accepted it in payment of the priordebt, he became a purchaser for value, andwithout notice." Thus, he took it free of allequities." The money was not the propertyof the defendant bank, but became thedrawer's property, for which he paid value.So the drawer's loss was not cured by thepayment from A. It seems, therefore, thatif the drawer was not precluded as above sug-gested, he should have recovered the fullamount of the original check.
C. L. N.
THE CY PRES DOCTRINE IN NORTH CARO-LINA-"In the law of charitable trusts inEngland and in all but a very few states,'there prevails a principle called the doctrineof cy pres. Under this doctrine, when prop-erty is given for a particular charitable pur-pose, and when that purpose becomes impos-
"i Coggil v. The American Exchange Bank, 1 X .Y. 113 (1847).
20 Ibid.' Shipman v..Bank of State of N. Y., 126 N. Y.
318, 27 N. E. 371 (1891)."Phillips v. Mercantile National Bank, 140 N.
Y. 556, 35 N. E. 982 (1894)."Newton v. Porter, 69 N. C. 133 (1877). See
19 IHarv. Law Rev. 55. Edwards v. Culberson, 111N. C. 343, 16 S. E. 233 (1892).
24 Mechanic's Bank v. Chardavoyne, 69 N. J. L.256, 55 Ad. 1080 (1903).
25 Nassau Bank v. Bank of Newburg, 159 N. Y.456, 54 N. E. 66 (1899).
'The cases are collected in 5 L. R. A. 33, note,6 ibid. 147, 14 L. R. A. (n. s.) 59, note, and 37ibid. 1007, note.
THE NORTH CAROLINA LAW REVIEW
sible of accomplishment, the courts may au-thorize the application of the property toother charitable purposes, provided those otherpurposes, as well as the expressed purpose,fall within a more general charitable purposeof the donor. The doctrine also applies whenthe particular charitable purpose of the donoris or becomes illegal."' This concept origi-nated in mediaeval times, when, "as ....pious donations were the price paid to Heavenor to its more exacting broker, the Church,for its favor, 'one kind of charity' would in-deed have 'embalmed the testator's memory, aswell as another,' for his intent was not theapplication of the purchase money, but thedelivery of the goods purchased ..... Thetestator's paramount object being salvation,the means were immaterial."'
The doctrine of cy pres is not, however,recognized in North Carolina. This note in-dicates the development of that attitude inthis state.
The pioneer North Carolina case on thejurisdiction of a court of equity to enforcea charitable trust, is Griffin v. Grahaim,' de-cided in 1820. From the altogether sweepingacceptance in that case of the complete juris-diction of the English chancellors over chari-table trusts, it might be inferred that the Courtwould not have been unwilling, had the ques-tion been before it, to recognize also, as acorollary of that jurisdiction, the availabilityof cy pres relief. Eight years later, how-ever, in McAuley v. Wilson,' when the ques-tion first aiose, the Court flatly repudiated thedoctrine of cy pres. This seems to have beenmainly because of the feeling that a courtought not to make over a person's will inthe absence of proper proof that the alter-ation would have had the testator's approval.In other words, the view was that a courtought to hesitate long before substituting forthe terms of the will a guess as to what thedeceased would have desired had he knownof the impediment in the way of carrying outhis expressed wish. This reasoning was aug-mented in the case of Holland v. Peck," de-cided in 1842, by the assertion that the doc-trine of cy pres was admitted by the Englishcourts to be unsound, 'that many of the re-sults in England had been revolting, and that
2 Austin W. Scott, Education and the Dead Hand,34 Harv. Law Rev. 1, 5.
3Joseph Willard, Illustrations of the Origin ofCy Pres, 8 Harv. Law Rev. 69, 91.
48 N. C. 96, 9 Am. Dec. 619 (1820).5 16 N. C. 276, 18 Am. Dec. 587 (1828).c37 N. C. 255 (1842).
the concept had never been accepted by anyof the American courts.
Although, as has been seen, most Americancourts have now adopted' the cy prcs doc-trine, the North Carolina view seems analyti-cally correct. "That such a doctrine (thatof cy pres) should not only have survived thestate of society and of belief in which it origi-nated, but should also have been developedinto an integral part of the jurisprudenceof a social order and faith radically diverse,may occasion surprise. And a doubt may arisewhether in administering it, the peculiar cir-cumstances of its beginning and development-we might indeed say the necessary conditionsof its existence-are borne in mind; orwhether it is considered that the moderntestator, not intending a purchase of Heavenwith his 'bona caducis' but a specific bequestto a specific charity, may be presumed tohave known not merely what he intended,but what he did not intend, in the case of acharity, as well as any testamentary disposi-tion made by him; or that the court in im-puting to him what he did not say, because hemight have said it, may not run some riskof making him say what he would have em-phatically repudiated."'
The Supreme Court of North Carolina hashad occasion to refer to and discuss the doc-trine of cy pres in connection with some fourtypes of cases.
One situation has been that in which the tes-tator has not designated with sufficient definite-ness the beneficiaries of a charitable trust andtho means to be used in its accomplishment.While, on the one hand, the Court seems tohave become more liberal as to the exactnesswith which these matters must be fixed bythe terms of the will, the view is firmly main-tained that the doctrine of cy pres may not beresorted to in North Carolina to enable theCourt to uphold the trust by supplying theomissions mentioned.'
Another has been the case where the fundsavailable were insufficient to accomplish thefull intent of the testator. The fact thatthe doctrine of cy pres is not recognized hasnot operated, in this situation, to prevent theapplication of the funds, as far as possible,to the purpose set forth in the will. As the
' See note 1, supra.'See note 3, supra." Holland v. Peck, 37 N. C. 255 (1842); Bridgej
v. Pleasants, 39 N. C. 26, 44 Am. Dec. 94 (1845);Taylor v. Ant. Bible Society, 42 N. C. 201 (1857);Keith v. Scaes, 124 N. C. 497, 32 S. E. 809 (1899).Amid see note 14, post. Cf. Fairbault v. Taylor, 58N. C. 219 (1859), in which, however, no charitabletrust was involved.
THE NORTH CAROLINA LAW REVIEW
Court said in a recent case," "this is not thedoctrine of the cy pres, which is to applythe sum to some other purpose 'equally asgood,' but is the application of the fund tothe very purpose named, as far as it willgo,fti
The third case has been that in which someobstruction has arisen to make it impossibleto carry out the expressed purpose of thetestator. Here the Court has been compelledto decree, that as to the property involved, thedonor died intestate, "for we do not, as theydo in England, apply it to other objects of asimilar kind, by what is called the doctrineof cy pres."'
And the same result has obtained where thetrust was for an illegal purpose.
In the recent North Carolina case ofWachovia Bank and Trust Company v. Og-burn," the facts were these: Three hundredacres of land, known as Vade Mecum Springs,and $209,000 were "to be set apart and heldin trust to conserve, protect and beautify saidproperty, contribute to the construction ofsuitable roads to and through the premises aswell as to a railroad . . . .and erect thereona commodious and permanent auditorium orassembly room for the meeting and gatheringof educational, religious, scientific, medicinalor other worthy organizations or associations.My object and hope being that the same maybe developed into and become not only awatering resort, but an institution after theorder of a chautauqua." The heirs contendedthat the trust was invalid on the grounds,among others, that the beneficiaries and thedetails of the plans had not been namedwith sufficient definiteness, and that the fundsavailable were insufficient to carry out fullythe wishes expressed in the will. The trustwas held valid, however, the Court saying:"It is sufficient if the testator describes de-finitely the general nature of the trust. Hemay leave the details of its execution to thetrustee under the superintendence of the courtof equity. A gift to charity is complete with-out reference to any of the suggestions ordirections of the testator as to the details ofthe manner in which it shall be carried intoeffect, . provided the objects are specific
10 Wachovia Bank and Trust Co. v. Ogburn, 181N. C. 324, 328, 107 S. E. 238 (1921).
11 University v. Gatling, 81 N. C. 508 (1879);Paine v. Forney, 128 N. C. 237, 38 S. E. 885(1901). And see note 14, post.
UMcAuley v. Wilson, 16 N. C. 276, 18 Am.Dec. 587 (1828); Trustees v. Chambers, 56 N. C.253 (1857).
VLemnmond v. Peoples, 41 N. C. 137 (1848).34 181 N. C. 324, 107 S. E. 238 (1921).
enough that the Court by decree can effectu-ate them ..... It is true that the doctrine ofcy pres is not recognized in this state, andit is not called for here simply by the fact thatihe testator wisely did not attempt to workout all the details of the plan which he knewmust be modified by future developments."It was presumed that the trustee would "cutthe coat according to the cloth" and the fundsin hand were applied as far as they would go,toward carrying out the contemplated pro-ject. This result is in accord with the deci-sions and dicta in the first and second groupsof cases noted above. R. R.
RISK oF Loss WHSERE SELLER RErAINSSECURITY TITLE. ' "In a transaction of a pur-chase of goods where nothing is to be done,the price agreed upon and nothing said aboutpayment or delivery, the property passes atonce and the future risk is put upon the pur-chaser, although he cannot take the goodsaway before he pays the price.".? In Jenkinsv. Jarrett,' there was a contract for the saleof a horse, with no stipulation as to paymentor delivery. The court applied the principleinvolved in the quotation, holding that titlepassed to the purchaser immediately althoughhe could not take away the horse withoutpaying the price. In these cases, there is noreservation of title, but the seller retainspossession of the goods to secure paymentof the purchase price. It is correctly assumedthat the risk of loss accompanies the owner-ship of the goods, that it is upon the selleruntil the property in the goods passes to thebuyer, and that after title passes, it is uponthe buyer.
A conditional sale gives rise to a moredifficult situation. Suppose the ordinary casein which the seller delivers property to thebuyer under an agreement that the seller'shallretain title until the price is paid. Before thetime of payment, the property is destroyed.Should the loss fall upon the seller merelybecause he holds the legal title? Some courts'
'This discussion is based very largely on NorthCarolina decisions, because the Sales Act has settledthe difficulty in the states which have adopted it.For a general discussion of the whole question, see:Williston, Sales, sec. 274 et seq., particularly 284,304, 305; Williston, Progress of the Law, 34 Harv.Law Rev. 741; Williston, The Risk of Loss Afteran Executory Contract of Sale in the Common Law,9 Harv., Law Rev. 106; Benjamin, Sales, 6th ed.419-467; Tiffany, Sales, 162-173.
2Richardson v. Insurance Company, 136 N. C.314, 48 S. E. 733 (1904).
3Jenkins v. Jarrett, 70 N. C. 255 (1874).4 Glisson v. Heggie, 105 Ga. 30, 31 S. E. 118
(1898); Soda Fountain Co. v. Blue, 146 Ala. 682,40 So. 218 (1906).
THE NORTH CAROLINA LAW REVIEW
have so held. A consideration of the natureof the transa.cion will give us the answer.
"A conditional sale is a sale, but upon con-dition, in -which the purchaser sustains therelation of the mortagor and the seller that ofthe mortgagee. And a discharge of the debt-the condition-by the purchaser is a dis-charge of the lien of the seller."' In otherwords, it is exactly as if the seller sold thegoods to the buyer and the buyer gave theseller a chattel mortgage back as security forthe payment of the price.' In Puffer v.Lucas,' the seller brought an action forpossession of a soda fountain, which had beensold to the defendant under a so-called lease.The lease called for a certain amount of rentin installments, title to vest in the lessee whenfull payment was made. The court correctlyheld that this was a conditional sale, althoughcalled a lease, and that since about four-fifthsof the installments had been paid, it would be"contrary to the fundamental principles ob-served in courts of equity" to allow the lessor(seller) to take the property and declare allpayments forfeited. The court decided, how-ever, that the defendant (buyer) should beallowed a reasonable time in which to paythe sum due the plaintiff, and if not then paid,there should be a sale of foreclosure to payoff such balance due plus the costs of action,the residue, if any, to be paid to the defend-ant. We are all familiar with the examplewhich the court had before them, that of acourt of equity in dealing with a mortgageof real estate and allowing the mortgagor(buyer) an equity of redemption and provid-ing for a foreclosure.
That the risk of loss in a conditional salefalls on the buyer is well settled in this state.In a leading case,' a certain dry kiln, which
'Singer Mfg. Co. v. Gray, 121 N. C. 168, 28 S.E. 257 (1897).
' In Chicago Railway Equipment Co. v. MerchantsBank, 136 U. S. 268, 283 (1890), Harlan, J. said,"The agreement that the title should remain in thepayee until the notes were paid . . . . is a shortform of chattel mortgage. The transaction is, inlegal effect, what it would have been if the maker,who purchased the cars, had given a mortgage backto the payee, securing the notes on the propertyuntil they were all fully paid."
IPuffer v. Lucas, 112 N. C. 377, 17 S. E. 174(1893).
8 Whitlock v. Lumber Co., 145 N. C. 120 58 S. E.909 (1907). In Tufts v. Griffin, 107 fq. C. 4712 S. E. 68 (1890), the plaintiff sued for the priceof a soda fountain which had been delivered to thedefendant under a conditional sale. The court heldthat the plaintiff should recover, though the prop-erty had been destroyed, and quoted from a case in-volving similar facts, Burnley v. Tufts, 66 Miss.48, 5 So. 627 (1889), in part as follows: "Burnleyunconditionally and absolutely promised to pay a cer-tain sum for the property the possession of whichhe received from Tufts. The fact that the property
was sold with other articles under a condi-tional sale, was held by the seller for deliveryat the request of the buyer. It was destroyedwithout any fault of the seller and the courtheld that he could recover the price. Walker,J. said, "The real and substantial nature ofthe transaction for the purpose of determiningwho-should bear the loss is that of mortgagorand mortgagee or lienor and lienee. Thecontract, it is true, creates technically a con-ditional sale, but the vendor, in fact, only re-tains the legal title as a security in equityand the title otherwise passes to the vendeewith a lien for the purpose named."'
Let us now consider the situation wherethere is an executed sale, with the additionalelement that the seller, for the purpose ofsecuring the purchase price, has the bill oflading for the goods made out to his ownorder. In such cases, if there were no bill oflading, it is clear that title would pass upondelivery to the carrier. As a general rule,when the seller delivers goods to the propercarrier, consigned to the buyer, the title andpossession of the goods passes to the buyer. "This is true, however, only if the goods con-form to specifications, for if the goods arenot what the buyer ordered, title remains inthe seller.'
Then what effect does the bill of lading tothe shipper's order have on the transaction?What do the parties intend? When businessmen ship goods in this way, they intend thatthe substantial property interest shall pass tothe buyer. They look at the transaction asan executed sale, with the bill of ladingmade out to the shipper's order for onepurpose only, i. e., to secure the purchaseprice, just as the seller in a conditional salesecures the purchase price by reserving legaltitle. Business usage regards the sale asexecuted with the seller reserving a bare legaltitle for security.
The Sales Act, which, however, is not inforce in North Carolina, provides that where
has been destroyed . . . . before the time of pay.ment of the note last due, does not relieve him ofpayment of the price agreed upon. . He got exactlywhat he contracted for, viz., the possession of theproperty and the right to acquire an absolute titleby payment of the agreed price. The tranasetionwas something more than an executory conditionalsale. The seller has done all he was to do exceptto receive the purchase price; the purchaser hasreceived all that he was to receive as the consider.ation of his promise to pay."9 Whitlock v. Lumber Co., 145 N. C. 120, 58 S. E.
909 (1907).11 Gwvn Co. v. Railroad, 85 N. C. 429, 39 Am.
Rep. 768 (1881); Acme Paper Box Factory v. Rail.road, 148 N. C. 421, 62 S. E. 557 (1908).
"Richardson v. Woodruff and Sons, 178 N. C. 46,100 S. E. 173 (1919).
THE NORTH CAROLINA LAW REVIEW
goods are shipped and by the bill of ladingare deliverable to the seller or order ....the seller thereby reserves the property in thegoods. "But if, except for the form of thebill of lading, the property would have passedto the buyer on shipment of the goods, theseller's property in the goods shall be deemedto be only for the purpose of securing per-formance, by the buyer of his obligationsunder the contract.' In such case, thegoods are at the buyer's risk from the timeof delivery to the carrier." The NorthCarolina Supreme Court in the late case ofPenninian v. Winder," however, did not lookbeyond the mere fact that the seller had re-tained title." It was held that the risk of lossduring transit was upon the seller. In thatcase, the plaintiff and defendant entered intoa contract for the sale of 95 tons of lime,f. o. b. vessel at Baltimore. The buyerarranged with ship brokers for a certain shipto receive the lime at Baltimore for him.This was done and the bill of lading wasmade to the shipper's order, notify the buyer.This bill of lading was attached to a sightdraft for the price and sent through a bankfor collection. On the voyage, the ship sankand this action was to recover the purchaseprice. Judgment of non-suit was given andthis was affirmed in the Supreme Court,Brown, J. saying, "The general rule in mer-cantile law is that the risk follows the title.If title had passed to the defendant, then, therisk of loss was on him. If, on the contrary,title had not passed to the defendant, butwas retained by the plaintiff, then, the risk intransit was on the plaintiff and he cannotrecover the price of the lime. We think theundisputed evidence shows that the title to thelime was retained by the plaintiff for his ownprotection, and that it was only to be de-livered to the defendant upon payment of thedraft attached to the bill of lading. Whenthe seller ships goods to order, notify, anddraws for the purchase money, the title andthe right of possession to the property is re-served by the seller, until the draft is paid.No title passes to the buyer and any loss intransit must be borne by the seller.""
12 Sales Act, sec. 20 (2)."a Sales Act, sec. 22 a. In Alderman Bros. Co.
7. Westinghouse, 92 Conn. 419, 103 Atl. 267(1918) decided under the Sales Act, the buyer washeld liable for the price of goods destroyed intransit although the bill of lading was made to theseller's order.
4180 N. C. 73, 103 S. E. 908 (1920)."See 34 Harv. Law Rev. 741, 752.10 In York v. Jeffreys, 182 N. C. 452, 109 S. E.
80 (1921), the defendant asked for instructions that
The argument for the result in this case ismore fully set out in an earlier case,' wherethe court argues that when goods are shippedto the consignor's order, it is almost decisiveof the seller's intention to reserve the jisdisponendi and to prevent the property frompassing to the buyer. This, because by theterms of the bill of lading, the carrier is theconsignor's agent and not the consignee's; thecontract is executory until the draft is paidand if before that time the goods are destroy-ed, the loss falls upon the consignor.
This is a strict legal argument in whichins disponendi and property are erroneouslytreated as the same thing. This does notaccord with the modern mercantile view, asrepresented in the Sales Act, which is nowin force in half of our states, including all.the important commercial and manufacturingstates of the East and Middle West. Byapplying the reasoning of the cases referredto in the discussion of conditional sales, theNorth Carolina courts might reach the sameresult as the Sales Act reaches in the sectionscited. These cases recognize that the holderof a security title should not bear the risk ofless, because his only interest in the goodsis to be paid for them. Rather it should beborne by the buyer, because he has the equit-able ownership, the beneficial incidents oftitle. Suppose such reasoning had been fol-lowed in Penniman v. Winder. It is clearthat, except for the bill of lading, the partiesintended title to pass to the buyer when thelime was placed on board the buyer's ship atBaltimore. The shipper had the bill of ladingmade out solely to secure the price and whathe thus retained was only a security title.That the buyer had something in the natureof ownership is shown by the cases whichallow the buyer, on making tender of theprice, to maintain trover or replevin againstanyone except a purchaser for value of thebill of lading." The situation is in legaleffect the same as an absolute sale to the
as the goods were shipped by bill of lading "to theirown order, notify buyer," that the plaintiffs assumedthe risk of any delay, because they 'retained titleto the goods during the course of transportationand until delivery to the defendants upon paymentof the draft. This was not denied, but the courtdecided that the shipment moved under a specialcontract, which relieved the sellers of liability fordelay over which they had no control, in this casean embargo on shipping during the war.
"'Asheboro Co. v. Railroad, 149 N. C. 261, 62S. E. 1091 (1908).
"Williston, Sales, sec. 284, and cases cited. SeePrice Brokerage Company v. Railroad, 199 S. W.,732 (Mo. App. 1917).
THE NORTH CAROLINA LAW REVIEW
buyer and a mortgage back to the seller tosecure the payment of the price.
The difficulty, as Professor Williston pointsout, is that the courts do not understand thatboth the seller and the buyer have incidentsof ownership. There is no difficulty in under-standing this distinction in case of a mort-gage of land in equity. A security title isnot different in its nature because it refers topersonal property, or is held in the form of achattel mortgage, a conditional sale, or a billof lading to the seller's order. "
R. H. W.
R.vocATIoN OF PAROLE AFTER ExPiRATIoNOF SENTENcE-A North Carolina statute'authorizes the governor to grant a pardon"subject to such conditions, restrictions andlimitations as he considers proper and neces-sary" and, upon proof of violation of any ofthe conditions, to order the offender recon-fined for the unexpired portion of the originalsentence. No credit thereon is to be givenfor the time that has elapsed between thedate of the conditional pardon and the dateof the rearrest. If, at the time of revocation,the offender is serving any other sentence ofimprisonment, the reconfinement is to beginupon the termination of that sentence. Underthis statute, in the recent case of State v.Yates,2 the Supreme Court of North Carolinahad occasion for the first time to determinewhether the governor has the power to re-voke a conditional pardon, more familiarlyknown as a parole, after expiration of theperiod of sentence. The facts in that casewere these. In October, 1919, Yates wasconvicted of violation of the prohibition lawsand sentenced to twelve months on the roads.After serving forty-two days of his sentence,he was paroled for the balance of his termupon condition that he maintain good be-havior. In December, 1921, upon proof ofrecent violations of the prohibition laws, thegovernor revoked the parole and orderedYates returned to prison for the remainderof his term. Upon certiorari to review therefusal of a writ of habeas corpus, it was heldthat the prisoner was in lawful custody.
This is a problem that has given rise tosome interesting discussion' and to conflicting
"See 34 Harv. Law Rev. 741, 751, 752.1C. S. sec. 7642-45.2 111 S. E. 337 (1922).3 See the notes in 2 Harv. Law Rev. 181, 231; 22
Ibid. 541, and 27 Ibid. 595.
decisions from the courts.' Some of the'casesseem to have been concerned with the scope ofthat power to grant conditional pardons whichis implied from a general constitutional par-doning power. Others, as the instant case,have involved the interpretation of generalprovisions in statutes authorizing conditionalpardons or paroles.
Those courts which have upheld the powerof the governor to revoke a parole after ex-piration of sentence seem to have been mainlyimpelled by three considerations: (a) Thepardon or parole is an act of executive clem-ency and may be granted on any conditions,not illegal, immoral or incapable of perform-ance, which the governor may prescribe.And the requirement that a man obey thelaws during the remainder of his life is notthought to be among these categories. (b)The prisoner need not accept the pardon orparole, and, if he does, he accepts the obliga-tion to perform the conditions annexed withthe consequences attendant upon their viola-tion. (c) The actual amount of punishmentis the important thing, and not the date of itstermination.
As opposed to these considerations, thecourts which take the view that the governor,in the absence of express statutory authority,is without power to revoke a parole after ex-piration of sentence, do so mainly on thesegrounds: (a) A condition of a pardon orparole whose performance extends beyondthe time for termination of the original sen-tence is illegal in that it amounts to anexecutive lengthening of that sentence. Thatis, a paroled convict is so hedged about withrestrictions upon his conduct and movementsas to be essentially in the position of a prison-er on leave rather than that of a free man.(b) That a convict's consent to postponementof sentence upon compliance with certain con-ditions can hardly be said, in view of theiature of the alternative, to be a wholly freeand voluntary undertaking. (c) The time ele-ment, that is, the period of life during whichpunishment is suffered, is a vital factor inany treatment of an offender. One case, at
'The cases are collected and commented upon inthe discussions cited in note 3, and in 5 L. R. A.(N. S.) 1064; 16 Ibid. 304, and 20 R. C. L. 555.Important decisions in accord with the principal caseare Fuller v. State, 122 Ala. 32, 26 So. 146 (1899);State v. Horne, 52 Fla. 125, 42 So. 388 (1906).Representative of the equally numerous decisionscontra are In re Prout 12 Idaho 494, 86 -Pae. 275(1906); and Woodward v. Murdock, 124 Ind. 439,24 N. E. 1047 (1890).
THE NORTH CAROLINA LAW REVIEW
least, has gone so far as to hold that, in theabsence of contrary provisions in the pardonitself, the conditions upon which it wasgranted will be held to have lapsed at thetermination of the original sentence!s It issubmitted that this is the view most con-sistent with the nature and purpose of themodern system of conditional pardons orparoles. There seems to have been nothingin the North Carolina constitution or statuteto have required the holding of the principalcase.
On the contrary, there seems to be what isat least a statutory analogy against it. Thestatute mentioned at the beginning of thisnote, and the only statute relied upon by theCourt, is an act of 1905, regulating the gov-ernor's pardoning power generally. It isfound in the chapter on state officers. Itdoes not expressly deal with the matter oftermination of conditional pardons. There isanother statute on this subject, however, anact of 1917, found in the fourth article ofthe chapter relating to the state prison. Thisarticle is concerned with the powers and dutiesof the advisory board of parole. Apparentlythis statute relates mainly to the parole ofinmates of the state's prison. Sec. 7753, thefifth section of that article, contains the fol-lowing significant sentence: "Such paroleshall be for such time as will fill out theterm of imprisonment to which the prisonerwas sentenced." It is true, of course, thatYates was never an inmate of the state'sprison, and his case does not seem to havebeen handled by the advisory board of parole.But it is interesting to note that the legisla-tive conception of the period during whichconditional pardons or paroles of the mostserious type of offenders, those sentenced tothe penitentiary, may be enforced, is lessstringent than that of the Court as to lessercriminals, namely, those sentenced to localjails and road gangs. In determining themeaning of such a statute as sec. 7644, regu-lating generally the governor's powers as torevocations of conditional pardons, and thelegality of conditions imposed under a con-stitutional pardoning power, whose perform-ance extends beyond the termination of theoriginal period of sentence, this limitation insec. 7753 should have been of definite per-suasive force.
Regardless, however, of the correctness ofthe Yates case as a matter of law, the de-cision has a direct bearing upon the develop-ment of a more thorough-going statutory
I Huff v. Dyer, 4 Oh. Cir. Ct. Rep. 595.
system of pardon and parole in North Caro-lina. The effect of the case is to give thestate, in the case of lesser offenders, a lifejurisdiction over a prisoner released on con-ditional pardon or parole, regardless of thenature of his crime, with the attendant rightof supervision of his conduct, and the powerto return the parole violator to prison. Fromone point of view this indefinite continuanceof parole should have a salutary effect onthe conduct of this class of paroled men,They will always have hanging over them thefear of a summary return to prison if theyfail to go straight. The value of this withcertain types of weak-willed offenderg isobvious. The outstretched hand of the lawready to insist on payment for their formercrime without further legal formalities maybe just what is needed to strengthen theirdetermination to live as law abiding citizens.
On the other hand, are not those courtsright which say that what is virtually lifeparole constitutes an unwarranted extensionof punishment? The paroled man, who is re-leased under the terms of a conditional pardonbefore the expiration of his prison sentence, re-tains, until discharged from parole, the statusof a prisoner. In the case of a paroled inmateof the state's prison, at least, he is requiredby lawc to report to the Superior Court once amonth and to give satisfactory evidence thathis conduct has been in accord with the condi-tions of the parole. In case of an alleged viola-tion of his parole, the governor may order hisreturn to prison without a jury trial as tohis guilt. Parole must therefore be regardedas a substitute for imprisonment rather thanas a conditional suspension or postponementof the prison term. And it is easily con-ceivable that the indefinite continuance ofparole may work a greater hardship on theconvicted man than the original sentence' con-templated. Any man adjudged worthy ofbeing released on parole ought to be able tolook forward to the time when he can re-cover his original status and feel himself tobe on an equality with other men. If thestate retains indefinitely the right of super-vision of men' released on parole, their onlyhope of absolute freedom from the legal con-sequences of their former crime lies eitherin a full and complete pardon, or in theabandonment of their homes and the conceal-ment of their identities under assumed namesin new environments.
It is suggested that one practical way outof this difficulty would be to enact a statute
C. S. sec. 7754.
THE NORTH CAROLINA LAW REVIEW
providing, as is done in many states,' thatparoles of all persons should terminate eitherautomatically upon expiration of the maxi-mum sentence or by formal discharge fromparole at that time by the proper authorities.
M. T. V. H., andJESSE F. STEINER.
Professor of Social Technology,University of North Carolina
PART PERFORMANCE AND THE STATUTE OFFRAUDS IN NORTH CAROLINA-"Taking casesout of the Statute of Frauds by part perform-ance is an anomaly."' There is, however, astrong historical justification for so doing,found in the attitude of the English chan-cellors during the 17th and 18th centuriestoward the acts of Parliament and in thebroad conception of their power to makethings over along ethical lines.' This attitudeis also seen in the hostility exhibited by thechancellors of this period toward the Statuteof Limitations. It was due, perhaps, to afeeling that their power was too great to becircumscribed by an act of Parliament Inthis country, there are a number of differentviews as to taking cases of oral contracts forthe purchase and sale of land out of theStatute of Frauds by part performance. Bythe weight of authority, taking possessionalone is sufficient.' In some jurisdictions, notonly must possession be taken under the oralcontract, but valuable improvements must beerected In others, possession must be takenand part or all of the purchase money paid."In four jurisdictions, including North Caro-lina, the doctrine of part performance hasbeen repudiated." This note discusses the mainfeatures of the North Carolina view.
7See E. R. Cass, A Study of Parole Laws andMethods in the United States, Prison Association ofNew York, 1921.
'Roscoe Pound, The Progress of the Law, 1918-1919; Equity, 33 Harv. L. Rev. 933, 935.2
1bid; p. 941.3"When chancellors held such ideas, a substantial
livery of seisin, the substance of a common law con-veyenee, or a serious hardship upon purchaser,which might be brought under the all embracing andmagic word, 'fraud,' might well suffice to move themto dispense with the Statute." Ibid; p. 941.
'Butcher v. Stapely, 1 Vernon 363 (1685), 1 AmesEq. Cas. 279, and note.
S Burns v. Dagget, 141 Mass. 368, 6 N. E. 723(1886); see 18 Harv. E. Rev. 137. See also Moorev. Small, 19 Pa. 461 (1852).
9 Wright v. Raftree, 181 Ill. 464, 473, 54 N. E.998 (1899.) See also n. 15, post.
7 The three other jurisdictions are Miss., Ky. andTenn. See Houston v. Jordan, 42 Miss. 380 (1869);Dean v. Cassidy 88 Ky. 572, 11 S. W. 601 (1899);Batton v. McClure, Mart & Y. (Tenn.) 333 (1828).Apparently the rule in these jurisdictions wasfQrmerly the rule in Mass. See Buck v. Dowley,16 Gray 555 (1860); Glass v. Hulbert, 102 Mass.24, 33 (1869). The present rule in Mass. is lessstringent; Potter v. Jacobs, 111 Mass. 32 (1872);Low v. Low 173 Mass. 580, 54 N. E. 257 (1899).See Story, Eq. Jur., 14 ed., sec. 1045; Clark, Equity,sec. 133-134; Bispham, Equity, 9 ed., sec. 384.
In Ballard v. Boyctte,' after pointing outthat there is no doctrine in North Carolinawhereby part performance may take a caseout of the Statute of Frauds, the Court callsattention to the fact that the owner of land,who makes a parol agreement, cannot repudi-ate it and also claim the benefits thereof,whether money paid on the purchase price orthe improvements made by the purchaser. Inthe opinion in that case, the late Judge W. R.Allen cites, among other cases, Ellis v Ellis,'and quotes the general rule from Pitt v,Moore," as follows: "Whatever may havebeen the ancient rule, it is now well settledby many decisions, from Baker v. Carson,"in which there was a divided court, but inwhich Ruffin, C. J., and Gaston, J. concurred,and Albea v. Griffin,' by a unanimous court,to Hedgepeth v. Rose,"s that where the laboror the money of a person had been expendedin a permanent improvement and enrichmentof the property of another by a parol contractor agreement, which cannot be enforced be-cause, and only because, it is not in writing,the party repudiating the contract, as he maydo, will not be allowed to take and hold theproperty thus improved and enriched, 'with-out compensation for the additional valuewhich these improvements have conferredupon the property,' and it rests upon the broadprinciple that it is against conscience that oneman shall be enriched to the injury and costof another induced by his own act."
This, on principal, is the logical and cor-rect view, although it may sometimes fail todo justice between the parties in a particularcase. As an act of the North Carolina legis-lature, the Statute of Frauds, if constitutional,is binding, and judicial legislation should notbe undertaken by the courts to thwart theplain language of the authorized lawmakers,whatever may be the opinion of the judgesas to its wisdom, and whatever may have beenthe 17th century conception of the effect ofan act of Parliament. If a modification oflegislation is needed it is for the people tocommand, not for the judiciary to legislate,
Judge Story presents " the majority viewof the English and American courts as fol-lows: "The distinct ground upon whichcourts of equity interfere in cases of this sortis, that otherwise, one party would be enabledto practise a fraud upon the other; and itcould never be the intention of the Statute to
8171 N. C. 24, 86 S. E. 175 (1915).9 16 N. C. 341 (1829).1099 N. C. 85; 5 S. E. 389 (1888).st21 N. C. 381 (1836).- 22 N. C. "9 (1838).195 N. C. 41 (1886)."12 Story, Eq. Jur., 14 ed., sec. 1045.
THE NORTH CAROLINA LAW REVIEW
enable any party to commit such a fraud withimpunity. Indeed fraud in all cases consti-tutes an answer to the most solemn acts andconveyances." The Statute says contra, how-ever, and there is no fraudulent result where,as in North Carolina, the purchaser is allowedcompensation, for the value of his improve-ments. Judge Story's statement, however, ofthe qualifying principle which ought to governin cases of this sort is enlightening, and itwould be well if it had been consistentlyapplied. He states that nothing is to be con-sidered as a part performance which does notput a party into a situation which will amountto a fraud upon him if the agreement is notfully performed.'
Dean Pound concludes that "the equities ofone who has been put in possession or of onewho has partly performed, call for makinghim whole for what he is out upon faith ofthe contract, so far as a court of equity maydo so. Hence they amply justify the view ofcertain Southern courts, which carry equitablerelief so far as to give the purchaser anaccounting and a complete restitution, but nofurther."" After referring to Lord Sel-borne's opinion in Maddison v. Alderson,5 asthe best rationalization of part performanceto be found, he concludes that the "tendencyof the American courts to require somethingmore than merely taking possession under thecontract, and the refusal of many courts togrant relief even in hard cases of service,where no possession is taken, without someact solely referable to the contract, are welljustified and are in the right line to progresstoward a satisfactory law upon this subject." I
It is pointed out in a note in the HarvardLaw Review,9 that the results of the NorthCarolina view are not always just. The casereferred to in this note is Pass v. Brooks,
where, under an oral contract for the purchaseof land the defendant entered into possession,paid the purchase price and made permanentimprovements. It was held that in caseswithin the Statute of Frauds a court of equitywill not grant specific performance. Withreference to the justice of such a case, suffi-
1 2 Story, Eq. Jur., 14 ed., sec. 1047, n. I. Seealso note 6, supra.2 33 Harv. L. Rev., 933, 936, 939, 944.iT 8 App. Cas. 467, 475-476 (1883).Is 33 Harv. L. Rev. 933, 944. "As a matter of
principle, it would seem that this minority view andthe theory by which it is usually explained is thepreferable one." Clark, Equity, sec. 135.
ii 13 Harv. L. Rev. 410.' 125 N. C. 129, 34 S. E. 228 (1899). A etition
to rehear this case was allowed in 127 N. C. 119,37 S. E. 151 (1900). The result of the case, how-ever, was not materially changed.
cient importance does not seem to have beenattached by the writer of the note in theHarvard Law Review to the fact that theCourt in the Pass case required restitution ofthe purchase money and compensation for im-provements. The comment in the note on therule is as follows: "That such a rule willoften fail to do justice between the parties,is obvious, and the results of the prevailingdoctrine are far more satisfactory, thoughusually not reached without some violence tothe words of the Statute." ' The view thereexpressed is that injustice results if specificperformance is not allowed. It is submittedthat the Statute clearly makes that resultinevitable, and that justice is done by theother relief given.
The North Carolina cases fall chiefly intogroups where possession was taken and val-uable improvements made,' or where a partor all of the purchase money was paid, 3 orwhere as in the recent case of Perry v.Norton,2' the plaintiff worked under a parolagreement and also made valuable improve-ments. In that case, the defendant was topay plaintiff $40.00 a month and in additionto deed him the cottage and lot occupied inlieu of higher wages he could have receivedby working elsewhere. Held, defendant isliable for improvements made by plaintiff.The plaintiff's equity "rests upon the broadprinciple that it is against conscience for oneman to be enriched to the injury and cost ofanother, which was induced by his own acts. '
In the recent case of Carter v. Carter,2 ' thecourt holds that where the full amount of the
2 See also 12 Harv. L.' Rev. 506. Compare:Wilkie v. Womble, 90 N. C. 254 (1884), (cited innote in 19 L. R. A. 879); Murdock v. Anderson,57 N. C. 77 (1858); Ellis v. Ellis, 16 N. C. 398(1830). See note 26, post.
- Luton v. Badham, 127 N. C. 96, 37 S. E. 143(1900); citing Ellis v. Ellis, 16 N. C. 341 (1829);Albca v. Griffin, 22 N. C. 9 (1838); Lyon v. Criss-man, 22 N. C. 268 (1839); Pitt v. Moore, 99 N. C.85, 5 S. E. 389 (1888); Tucker v. M11arkland, 101N. C. 422, 8 S. E. 169 (1888); Chambers v. Massey,42 N. C. 286 (1851); Thomas v. Kyles, 54 N. C. 302(1854); Love v. Neilson, 54 N. C. 339 (1854).
23Ballard v. Boyette, 171 N. C. 24, 86 S. E. 175(1915); Kelly v. Johnson, 135 N. C. 647, 47 S. E.
574 (1904); Ford v. Stroud, 150 N. C. 362, 64 S.E. 1 (1909); Hedgepeth v. Rose, 95 N. C. 41(1886) Danicl v. Crunpler, 75 N. C. 184 (1876);Carter v. Carter, 182 N. C. 186, 108 S. E. 765(1921).24 182 N. C. 585, 109 S. E. 641 (1921).2 Citing Luton v. Badham, 127 N. C. 96, 37 S.
E. 143, 53 L. R. A. 337, 80 Am. St. Rep. 783(1900); Ford v. Stroud, 150 N. C. 362, 64 S. E.1 (1909); Ballard v. Boyette, 171 N. C. 24, 86 S. E.175 (1915); and citing also "the very able and thewriter (Walker J.) thinks, conclusive opinion ofSmith C. 3., in McCracken v. McCracken, 88 N. C.272 (1883)."
= 182 N. C. 186, 108 S. E. 765 (1921).
THE NORTH CAROLINA LAW REVIEW
purchase money is paid and the purchaserenters into possession and makes improve-ments under a parol contract to convey land,and where the vendor afterward repudiatesby refusing to convey, the purchaser may re-cover the price and, in addition, the value ofhis improvements to the extent that they haveenhanced the value of the land. On page 766,the Court refers to Jones v. Sandlin,' andsays that "the general rule is that if one isinduced to improve land under a promise toconvey the same to him, which promise is voidor voidable, and after the improvements aremade he refuses to convey, the party thusdisappointed shall have the benefit of theimprovements to the extent that they increasedthe value of the land." "
Thus it seems that North Carolina has con-sistently, in all fact situations, enforced theequities between the parties by making thedisappointed vendee whole, as far as practica-ble, even though the unwritten contract assuch has been thought to be unenforceable be-cause of the effect of the Statute.
As late as 1900, however, Judge Douglascould not even concur in the judgment inLuton v. Badhan,3' because it seemed to him"to fly in the teeth of the statute of frauds."The Court held in that case that the vendorin possession, who repudiates a parol contractto convey land, is liable to the vendee for thevalue of the improvements made by the latter.Judge Douglas felt that the vendee's claimfor improvements was a purely defensiveremedy. He thought that the Statute "thoughfounded on acknowledged principles of publicpolicy and repeatedly affirmed and reaffirmedby legislative enactment was doomed to ulti-mate emasculation by the well-meaning, butdangerous relaxations of the courts, basedupon the extension of equitable principles."He pointed out that the plaintiff was not inpossession and that this distinguished the casefrom previous cases. If he felt this wayabout the North Carolina view how must hehave felt about the majority elsewhere? He
- 160 N. C. 150, 154, 75 S. E. 1075, 1077 (1912).Eg Citing Kelly v. Johnson, 135 N. C. 647, 47 S.
E. 674 (1904); Reed v. Exum, 84 N. C. 430(1881); Luton v. Badham, 127 N. C. 96, 37 S. E.143, 53 L. R. A. 337, 80 Am. St. Rep. 783 (1900);Albea v. Griffin, 22 N. C. 9 (1838); Hedgepeth v.Rose, 95 N. C. 41 (1886); Pitt v. Moore, 99 N. C.85, 5 S. E. 389, 6 Am. St. Rep. 489 (1888). Mc.Cracken v. McCracken, 88 N. C. 272, 276 (1883),is also referred to as is the fact that judge Ruffin(the younger, and not the Chief Justice who was
on the bench when Judge Gaston wrote Albea v.Griffin and he himself wrote Baker v. Carson) saidthat Albea v. Griffin is "often referred to as theleading case on the subject."
127 N. C. 96, 37 S. E. 143, 53 L. R. A. 337,80 Am. St. Rep. 783 (1900).
referred to McCracken v. McCrackcn,' as theonly case where the vendee had even askedfor the value of the improvements. In thatcase the vendor offered to let the vendee takehis improvements, one of them being a millrace dug in the ground. But as Judge Douglaspointed out, "A hole in the ground is not avery valuable piece of property when severedfrom the realty, and so the vendee asked thecourt to give him something else instead.""
The rule for estimating the value of theimprovements is declared in Wetherall v.Gorian.3' It is not what they cost the de-fendant, but how much they have added tothe value of the premises." P. H. W.
LEGISLATIVE POWER TO PENALIZE VIOLATIONOF ADMINISTRATIVE RULE-For many years,the existence of administrative agencies tocarry into effect the general policies of legis-lation has been found convenient and neces-ary to the attainment of governmental ends.
As the complexities of social and economicaffairs have increased, there has been a definitetendency to relieve the legislature of moreand more technical and detailed tasks, and toplace those responsibilities upon adminis-trative agencies.' And, irrespective of thefamiliar proposition that legislative powercannot be delegated, these agencies may infact be vested with the power to enact rea-sonable rules and regulations to carry thegeneral legislative policy into effect.' Some-what like the principle underlying the validityof broad delegations of legislative power tomunicipalities, which may be considered asan historical and inherent exception to thegeneral rule, this kind of legislation, namely,a grant of rule-making authority, has beenupheld upon the necessity for entrusting toespecially skilled enforcement officers the taskof specifying more technical and detailed rulesand regulations in furtherance of the generalpolicies embraced in the statute.'
.o88 N. C. 272 (1883).
3L 127 N. C., at p. 108, 37 S. E., at p. 147.-' 74 N. C. 603 (1876).3 See also Chatham v. Realty Co., 174 N. C. 671,
94 S. E. 447 (1917); Daniel v. Crumplcr, 75 N. C.184 (1876).
1 State v. Crosby, 92 Minn. 176, 99 N. W. 636(1904); Cook v. Burnquist, 242 Fed. 321 (1917).
"Interstate Commerce Com. v. Goodrich Trans.Co., 224 U. S. 194, 56 L. Ed. 729, 737 (1912);State v. Atlantic Coast Line R. R., 56 Fla. 617, 47So. 969, 32 L. R. A. (n. s.) 639, 659 (1908).
2 Tyrrell County v. Holloway, 182 N. C. 64, 108S. E. 337 (192 1); Cooley on Taxation, 3d Ed., 101.
4 Atlantic Express Co. v. W. & W. R. R., 111 N. C.463, 16 S. E. 393 (1892); Georgia R. R. v. Smith,70 Ga. 694 (1883); Buetfield v. Stranahan, 192 U, S.470, 496, 24 Sup. Ct. 349, 48 L. Ed. 525 (1904).
THE NORTH CAROLINA LAW REVIEW
Granting that the legislature may delegateto an administrative agency the power to makerules and regulations which will have theforce of law for all civil purposes,' may thelegislature make the violation of these rulesa criminal offense? ' There are at least twoconceivable fact situations. Suppose the legis-lature should enact that all the existingrules and regulations of a certain adminis-trative agency are adopted and made statutory,and that any violation thereof should be pun-ishable as a criminal offense. Here, there canbe no doubt as to the power of the legislaturebecause it raises the rule into law itself.! Inpther words, the legislature defines the ruleof conduct as effectually as if the rules andregulations penalized had been originally en-acted in the legislative halls. On the otherhand, suppose, as is the familiar case, thatthe legislature, upon creating a new admin-istrative agency, with the power to promul-gate retsonable rules and regulations, should,in advance, provide that a violation of anysuch rule should be a crime. Is this a validexercise of legislative power? Is this notdelegating to an administrative board theauthority to establish a standard of conductand to define a criminal offense? ' The ulti-mate question is, which authority by prescrib-ing the rule of conduct defines the offense?Is it the legislature, when it provides for thepunishment and establishes a broad standardof conduct? Or, is it the administrativeboard, which determines the precise rule ofconduct and specifies the exact facts and cir-.cumstances under which punishment is to beinvoked?
If it is the legislature itself which pre-scribes the rule of conduct and thus definesthe offense, it must be because the legislaturein advance ordains that a certain generalstandard of conduct is to be maintained in agiven general connection-that fish are to beprotected in breeding season-and then leavesit to the enforcement agency on the groundto make the standard more specifically appli-cable to the facts. In other words, this viewis that the agency merely defines more ex-actly a standard of conduct already broadlyestablished by the legislature; that the stand-
5 U. S. v. Shannon, 160 Fed. 870 (1908); U. S. v.Dasteraignes, 118 Fed. 199 (1902).
0 U. S. v. Maid, 116 Fed. 650. 652 (1902); U. S.v. Eaton, 144 U. S. 677, 688, 12 Sup. Ct. 764, 36L. Ed. S91 (1892).
T Ex Parte Siebold, 100 U. S. 371, 25 L. Ed. 717(1880).
8 U. S. v. Matthews, 146 Fed. 306 (1906); ExParte Koliock, 165 U. S. 526, 533, 41 L. Ed. 813,815 (1897).
ard violated is that of a general characterestablished by statute.
But if it is the prescription of the detailedrule by the board and not the action of thelegislature which really defines the offense,then the justification lies rather in expediencythan in legal doctrine. The contrariety ofopinion on this point indicates the possibleunsoundness in holding that this latter con-ception is not one of an actual delegation oflegislative power.? The practical effect ofthe decisions is such as to establish the beliefthat they were influenced more by the tend-ency of the time and necessity of the casethan by reconciliation with the theory thatlegislative power may not be delegated."
In the case of United States v. Grivzaud,uthe Supreme Court of the United States wasconfronted with an extreme situation, and byupholding the legislation there involved, it wascompelled not only to reverse a long line ofdecisions of inferior federal courts but tooverrule, as well, its own prior decision inthe same case.' An Act of Congress hadcreated certain forest reservations and hadvested in the Secretary of Agriculture gen-eral supervisory power with authority to makesuch rules and regulations as would accomplishthe purpose specified. Any violation of aregulation passed by the Secretary of Agri-culture and published for a certain length oftime was made a criminal offense. The de-fendant, having been indicted for grazingsheep upon the reservation without a permit,contrary to a regulation adopted by the Sec-retary of Agriculture and promulgated asrequired by the Act of Congress, demurredto the indictment. The demurrer was sus-tained in the District court on the groundthat there was no offense stated in the in-dictment, Congress alone having power tocreate a criminal offense. Upon appeal bythe United States, the Supreme Court firstaffirmed the decision of the District Court.On a rehearing, however, the Court over-ruled its prior decision and sustained thevalidity of the legislation. The following ex-tract is from the opinion in this case: "But
See note 6, supra.'o Ernst Freund, Principles of Legislation, 10 Am.
Pol. Sei. Rev. 1, 14; J. B. Cheadle, LegislativeFunctions, 27 Yale L. J. 892.
It220 U. S. 506, 31 Sup. Ct. 480, 55 L. Ed. 563(1910).
'3Reversing 170 Fed. 205 (1909); Light v. U. S.220 U. S. 523, 31 Sup. Ct. 485, 55 L. Ed. 570(1910); U. S. v. Rizzinell, 182 Fed. 675 (1910);U. S. v. Burke, 221 Fed. 1014 (1915). JudgmentReversed, Sales v. U. S., 234 Fed. 842, 148 C. C. A.440 (1916); Contra, see U. S. v. Matthews, 146Fed. 306 (1906).
THE NORTH CAROLINA LAW REVIEW
the authority to make administrative rules isriot a delegation of legislative power, nor aresuch rules raised from administrative to alegislative character because the violationthereof is made a criminal offense." TheCourt seems to come to the conclusion thatthe mere enactment of the administrativeregulation did not of itself create the of-fense, that this was done by the action ofthe legislature in the first instance."
The result of the Grimaud Case has oftenbeen reached by the Supreme Court of NorthCarolina. Perhaps the most interesting casesarising in this state involving this questionhave been concerned with the compulsoryvaccination and cattle tick laws. The vacci-nation law authorizes certain boards ofhealth in emergencies to require the vacci-nation of all inhabitants of the specifiedterritory." The cattle tick law vests in theBoard of Agriculture the power in emergen-cies to declare certain districts under quaran-tine, and to require all tick infested animalswithin the district to be dipped." The vio-lation of the rules made pursuant to theseacts is made a criminal offense. Both lawshave been upheld in every particular' Itshould be noted that here the problem in-volves elements both of contingent legislationand of legislative power to penalize violationof administrative rules. That is to say, theboard determines when the emergency exists
'31But see dissenting opinion of Field, J., in ExParte Siebold, supra, note 7.
1' C. S. sec. 7164.1C. S. sec. 4688, 4873.1 Morgan v. Stewart, 144 N. C. 424, 57 S. E. 149
(1907); State v. Hodges, 180 N. C. 751, 105 S. E.417 (1920). See also Synitt; v. State, 74 Tex. Cr.232, 168 S. W. 522 (1914).
under which the power to make rules be-comes operative, and, in advance of theirenactment, violations thereof are made pun-ishable by law.
The most recent decision in North Caro-lina is that of State v. Dudley." The Fish-eries Board was created for the purpose ofcarrying out a general statutory policy ofpreserving the fish supply. Pursuant tolegislative authority vested in it to makeregulations, the violation of which was madea crime, the Board enacted a regulation pro-hibiting, in certain waters of the state, thetaking of scallops with drags. The defend-ant was found guilty of violating this regula-tion and the Supreme Court in upholding theconviction cited and approved the GrimaudCase. The Court decided the case, however,as if it were mainly concerned with con-tingent legislation, and took the view thatit was the legislature which defined theoffense.
It is submitted that a violator of a ruleor regulation of an administrative agencyactually commits a breach of a duty imposed,not by the general language of the statute,but by the more definite provisions of the ruleor regulation, and that the legislature, whenit authorizes the enactment of rules andregulations and penalizes violations thereof,actually delegates legislative power to definea rule of future conduct. The results of thecases discussed represent an inevitable andentirely desirable relaxation of the theoreti-cal principle prohibitive of the delegation of.legislative power.
D. W. I.11 182 N. C. 822, 109 S. E. 63 (1921). Accord,
Payne v. Prozidence Gas Co., 31 R. I. 295, 77 Atl143, Ann. Cas. 1912 B 65 (1910).