VOLUME. 56, Nº. º. UNIVERSITY OF PENNSYLVANIA LAW REVIEW AMERICAN Lºw Register | Fºun Dºº lºº- June, 1908 - - CONTENTS Tº lºos ºn Wisbox on tº Division or Lºsºvº Powº º Cºss ºn tº Sºs - - - - - - - - - - - º - º sºon. Wºº is A Bºº Bº Fº. Oºº Cº. Lº Dºsſº Co. Lºcº --- --- º - Aº ºne - ºn Mº Hº- - ------------- - sº - Nº --- - sº ºf Cºsºs - - - - - - - --- - ºn ºr Rºws Rººts A ºncº ºn Association Fººl Usunº- | tº Nº. Lºw Mº Mº ºn Gº tº lºw. Tº Gººs º ºs of Lºw Dº Posts º: A Tº Lºw Lºº lºssº º º Nº Aºi Mº ºr tº Vº ºr ºn Assº- - - - - - - - - - - . . . . . | ºn tº Riº ºn - Pºsº Moº (ºr ſº, º sº tº - tº pººr of Lº Nºvºsº of Pºsº. - Tº º Cºsº Sº, º -- º º º ºr - º ---------º-º-º-º-º-º-º-º- ºn º tº º º º º º º º THREE LAW BOOKS THAT EVERY LAWYER SHOULD READ After a perusal you will admit you gain Iooo per cent. on the investment. SKILL IN TRIALS Second Edition Being some of the art, skill, fine work and advice of advocates like Beach, Choate, Curtis, Davis, Depew, Fountain, Ingersoll, Webs- ter, May and others, and how they win both fees and cases. 173 pages. Pocket size, price $1.00. TACT IN COURT Sixth Enlarged Edition Being a gist of cases won by skill, art, wit, tact, courage and eloquence with trial rules. New matter for trial lawyers. Pocket size, price $1.oo, nearly 200 pages. ART OF ADVOCATES AND SPEAKERS This little book is packed with prizes won in law. It pictures how, and when, and why, young lawyers win and succeed. Pocket size, 150 pages, price $1.o.o. Above three volumes are all by HON. J. W. DONOVAN LAWYERS’ COMMONPLACE AND BRIEF BOOK A thousand law subjects, size 8% x 11, 300 pages, bound leather spring backs, leather corners, marble paper sides, paged, price $3.00. A thousand pages, full leather ends and bands, paged, price $5.oo express prepaid. WILLIAMSON COLLECTION REGISTER Five hundred pages, with index, bound leather spring backs, leather corners, cloth sides, size 9% x 12, price $3.50. More of these collection registers are sold in the United States than all other collection registers combined. Thousands of attorneys will not have any other. GILBERT'S OFFICE AND LIBRARY INDEX A very convenient and useful book for the average lawyer's office. Price $5.oo. Send for descriptive circular. UNITED STATES OFFICIAL BANKRUPTCY BLANKS Printed on bond paper, suitable for any typewriter machine; four copies can be made at one time. Sixty-four blanks containing the necessary blanks for a case in bankruptcy. Price $1.50, express prepaid. SEND ORDERS TO Williamson Law Book Co. ROCHESTER, N. Y. iv. DEPARTMENT OF LAW UNIVERSITY OF PENNSYLVANIA LAW REVIEW AND AMERICAN LAW REGISTER FOUNDED 1852 56 O. s. } Vol. {; N. S. JUNE, 1908 NUMBER 6 THE INTENTION AND WISDOM OF THE DIVI- SION OF LEGISLATIVE POWER BE- TWEEN CONGRESS AND THE STATES. If there is one principle that our forefathers, founding the Constitution, had more at heart than any other, it is per- sonal liberty,+personal liberty as guaranteed by the universal $ight to equal law, the laws made by their own home repre- sentative bodies, administrated in their own home courts, and based on the common law of England; and the common law of England has ever been jealous of all but common law tribunals, wholly rejects any administrative law peculiar to the government as is known in continental countries, and abhors any tribunal, board, or commission, drawing its authority from the Executive, and which, while not a proper court of justice, undertakes to settle judicial questions. To secure all this, the great principle of the separation NotE.—This article formed the subject of an address delivered by Mr. Frederic J. Stimson before the Society of the Alumni of the Law Department of the University of Pennsylvania at their annual meeting on Friday, April 10th, 1908, and is published through his courtesy and kind permission. - - [3611 LATIVE Power BETween CoNGRESS AND STATES 371 deed, Congress is expressly given full power, social and do- mestic as well as political; but it is only of late years that it has generally exercised it in any other way than to erect ter- ritorial legislatures; and in the older territories, at least, there is no meddling with individual rights. The first eleven amendments are all restrictions; that is to say, they are at great pains expressly to withhold all social and domestic affairs, or cardinal liberty rights, from the Federal Government, and even some that are political; the first ten, therefore, showing a strong reaction in favor of the rights of the States and the liberties of the people, in 1791, while the eleventh Amendment was a still more decisive step in that direction, withholding all Federal judicial power where a State was directly concerned; much as James I en- deavored, thfough vainly, to get Chief Justice Coke to rule that he would not consider a case where the interests of the King were involved. The Thirteenth Amendment is strik- ing in that it is the only instance where the Constitution is expressly extended to any place subject to the jurisdiction of the United States, and where, as it has recently been put, “The Constitution follows the flag”. Slavery, therefore, can exist nowhere, not even in the Sulu Islands; although even the other cardinal requirement, a republican form of government, may constitutionally be withheld from them as from the other territories. The modern reaction in favor of the Federal power is shown first in the Fourteenth Amendment proclaimed July 28th, 1868, though the interpretation which might have rev- olutionized the whole State and Federal system has substan- tially been denied by the Supreme Court. The Amendment does, however, and for the first time, interfere between the State and the individual, if not between the individual and his neighbors. The State is forbidden to deprive any person of life, liberty or property without due process of law, or to deny any person within its jurisdiction the equal protec- tion of the laws, and this directly by the Federal Govern- ment. The radical upholders of centralization, in recon- struction times, undoubtedly believed that this brought the CHECK LEFT FOR DEPOSIT OR COLLECTION 377 amount of which had been credited to, but not drawn by, the depositor, on the maker's request? If the title to the checks thus passes to the bank on crediting them, then it follows that if the bank afterward re-delivers them to the depositor at his request, this is done as a favor, and not as a right.” Surely, absolute ownership by the bank is in- consistent with the right of recall by the depositor. Clearly established as the rule is, there certainly are some serious difficulties with the foundation on which it rests. There is no consideration for the transfer of the title un- less this be the right to draw the money represented by the checks. This, however, is a shadowy thing, for unques- tionably the bank has a right of withdrawing that credit at any time before the depositor has used it. The deposi- tor, therefore, receives at most a qualified right to draw which may be defeated by the sole action of the bank. Fur- thermore, if the bank had not the right to withdraw its credit, it would hardly dare make such an advance, for the act of the bank rightly considered is a loan, or rather an agreement to lend, for such a period of time between the actual deposit and collection of his checks as the depositor may desire. The right to cancel the credit has led some courts to hold that a transfer was not effected by crediting; in other words,” that this right was inconsistent with absolute ownership; but more frequently the courts have held other- wise.” In a well reasoned case decided by the Supreme Court of Kansas, it was said: “It may be conceded that if, after due and legal effort to collect a check, it should be dishonored, the bank would have the right to charge the amount of it to the depositor's account. Whether this * Metropolitan National Bank v. Loyd, 90 N. Y. 530, 535. * National Butchers’ and Drovers' Bank v. Hubbell, 117 N. Y. 384, *::::..., v. Farmers' & Merchants' Bank, 79 Mo. 421; Flannery v. Coates 80 Mo. 444; First Nat. Bank of Elkhart v. Armstrong, 39 Fed. (C. C.) 231, 233; Riverside Bank v. Woodhaven Junction Land Co., 34 N. Y. App. Div. 359. CHECK LEFT FOR DEPOSIT OR COLLECTION 383 tial respect. In both, the depositor has a right to draw when he pleases; in both, the debtor and creditor relation exists between him and the bank with respect to the deposit. In the one case, the bank owns or holds the depositor's note; in the other, his check. Its right and control over the one instrument is as perfect as its control over the other. The note can be given up before the money is drawn if the depositor should become insolvent, or, if it was forged, or possesses other infirmity not known when it was received, and the credit can be cancelled. A check can be returned if it was forged or otherwise imperfect, and should prove to be uncollectable after using the legally required diligence. May not the decision in the Cowles case be regarded as a return to a more rational view concerning the ownership of a check credited to a depositor with the right to immediate payment? In other words, so long as a depositor checks against his actual cash deposit, he is not borrowing, and the bank is not the bona fide purchaser of checks credited to him, but not collected. When his checks go beyond this line, then the bank becomes the owner either absolutely, or to the extent of its lien. Albert S. Bolles. 398 NOTES and sent back to his action on the original contract against the drawer, his customer or debtor. This last remedy is always open to him, for it has been universally held that none of the transactions with respect to the forged paper amounts to a “payment” in the technical sense of the term. THE RIGHT of A THIRD PARTY to SUE ON A CoNTRACT. The right of a third party to sue on a contract, made for his benefit but to which he was not a party, has been recognized so often and by so many jurisdictions, that it seems there must be some consistent principle on which to base it. The concen- sus of opinion of the textwriters, however, treats it as an anomaly. Certain well recognized transactions must be dis- tinguished. Whenever property is delivered to one man with an obligation attached to the specific property conveyed or delivered, in favor of a third person, there is no difficulty in giving the latter a right to bring an action in his own name. The facts might show, either that the legal title was conveyed with an equitable obligation attached in favor of a cestui que trust, or that the legal title passed direct to the third party, by the transaction, and that the promisor became a bailee to deliver —as, for example, delivery of goods to a carrier in fulfillment of a contract to sell. In both of the above cases there is an obligation attached to the specific property conveyed. The right of action in the beneficiary is not based upon contract, but upon a property right. The same transaction creates a contract right in the promisee and a property right in the bene- ficiary. In the case of Harrington v. Green, Io'7 N. Y. Supp. 403 (Nov., 1907), the defendant received a check from the promisee for $372—$82.44 of which was for the plaintiff. No reasons were given to sustain the recovery allowed. Nor did the facts show whether the defendant was to pay the plain- tiff out of the proceeds of the check. If such was the case, the defendant was clearly a trustee of an undivided moiety for the plaintiff. The difficulty arises when the promisor receives property, with no obligations attached to the specific res, but upon a promise to pay out of general assets, a sum certain to a third party. The latter may or may not be the sole beneficiary— premiums are paid by an insured to an insurance company, which promises to pay a sum certain to a named beneficiary. A mortgagor conveys land to B, who promises to pay the debt 4O6 NOTES questions involving freight rates," still the most positive declara- tions of the Supreme Court upon the subject have been in cases which involved passenger as well as freight rates." The same test has been adopted by the Interstate Commerce Com- mission.” It has been held, also, that a carrier is not justified in charg— ing an unduly high rate over a particular line which is a part of a great system, merely because that particular line fails to pay expenses,” and the right of a State to compel a railroad company to run a particular train for the convenience of the public, even though it entailed a pecuniary loss upon the com- pany, has been sustained by the Supreme Court of the United States.” On the other hand, the Supreme Court has held that in de- termining the reasonableness of a State regulation of intra- state traffic, all consideration of interstate traffic should be excluded, and that the intrastate rate should be so fixed as to afford a fair return to the carrier upon the capital invested in that branch of its business regardless of the income from inter- state traffic.” The bald question of separating the freight and passenger rates and the right of the carrier to secure a fair return upon each without regard to the return upon the other, seems, however, not to have been as yet presented to the Supreme Court for adjudication. The attitude of that court toward the question cannot be anticipated with certainty, but the cases cited incline, upon principle, toward the minority view in the principal case. * M., St. P. & Chicago Ry. Co. v. Minn., 134 U. S. 418 (1890); C. & N. W. R. R. Co. v. Dey, 35 Fed. Rep. 866 (1888); Ames v. U. Pac. Ry. Co., 64 Fed. Rep. 165 (1894); No. Dakota Rate Cas., 91 Fed. Rep. 47 (1898). * C. M., etc., Ry. Co. v. Tompkins, 176 U. S. 180 (1899); Ga. R. R., etc., Co. v. Smith, 128 U. S. 174 (1888); Reagan v. Farmers' L. & T. Co., 154 U. S. 362 (1893); Smyth v. Ames, 169 U. S. 466 (1897). * Brabham v. Atl. Coast Line, II Interst. Com. Rep. 464 (1905); Arts v. Seaboard Air Line Ry. Co., II Interst. Com. Rep. 458 (1905). * Interst. Com. Com. v. R. R. Co., 118 Fed. Rep. 613 (1902). "At Coast Line v. N. C. Corp. Com., 206 U. S., 1 (1906). ” Smyth v. Ames, 169 U. S. 466 (1897); No. Dakota Rate Cas., 91 Fed. Rep. 47 (1898).