the innermost soul of the lawyer, whose life is consecrated to his noble profession and who possesses an understanding of its splendid spirit. One is a threat, but the other is a promise.

If the lawyers do not advance in the regard and esteem of the people they will recede in character and quality. With them, as well as with all elements in creation, it is progression or regression. Progression means initiating and defending constructive. measures in the interest of justice. If an example be needed, let them read and reflect upon the sarcasm of the soulful "Blind Poet." If Milton had performed no other service, mankind is his everlasting debtor for placing before the eyes of the English lawyers the satirical picture of their miserabilism in the days of their weakness. The dull soul of an indigent or avaricious bar ceased to "ground their purposes on the prudent or heavenly contemplation of justice and equity, which was never taught them, but on the promising and pleasing thoughts of litigious terms, fat contentions and flowing fees." It will be helpful to turn from this sombre history to one of inspiration. To-day none are so honored, esteemed and respected of all their people as are England's lawyers, and to-day, England is a great, militant and cultured nation of brave men.

But, let our retrospection take a nobler and more unselfish turn. It is the call of duty, of opportunity, of the need of the people of their trained and mature minds in governmental concerns, no less than in individual enterprises, from which the true inspiration for progress and militancy should. come. Faithful soldiers of the blind Goddess of Justice, their first duty is in shielding her sacred shrine, mindful ever of Webster's call to his brethren, that "Justice is the chief interest of man on earth." And. in the words of Milton, may it be said of the lawyers, "Unmoved, unshaken, unseduced, unterrified, his loyalty he kept, his love, his zeal."

T. W. S.

NOTES OF IMPORTANT DECISIONS.

INCOME TAX-STOCK ISSUED ON ACCOUNT OF INCREASED VALUE OF ASSETS NOT TAXABLE AS INCOME.-A letter of the Commissioner of Internal Revenue to Messrs. Haff, Meservy, German & Michaels, of Kansas City, construes the application of the income tax to an oil company whose property greatly increased in value by the discovery of additional oil sands. The company decided to capitalize this increased value by declaring a stock dividend, which the Commisioner rules it not taxable as income. The Commissioner says:

"Your attention is invited to $31, added to the Act of September 8, 1916, by § 1211, Act of October 3, 1917.

"In accordance with the provisions of this section, all dividends, whether in stock or in cash, representing a distribution of earnings or profits accrued since March 1, 1913, constitute taxable income in the hands of the recip ient shareholders.

"You are informed that where a corporation enters upon its books an estimated increase in the value of corporate property and assets, and capitalizes such an item by an issue of additional stock distributed as a dividend to its shareholders, the office holds that neither the entry of the item of increased value on the books of the corporation nor the receipt of the dividends by the shareholders represents an accumulation of profit or a receipt of income subject to tax."

"The Supreme Court of the United States on Jan. 7, 1918, in the case of Towne v. Eisner, held stock dividends not to be taxable income."

ESTOPPEL-WITHDRAWAL BY INDEMNITY COMPANY FROM DEFENSE OF ASSURED. By decision in Minnesota the rule has become established that the control of defense in a suit by an employee against one insured as to recovery for accident gives to such employee a right of action against insurer. Patterson v. Adan, 119 Minn. 308, 138 N. W. 281, 48 L. R. A. (N. S.) 184.

Somewhat analogous to this theory is a ruling by Illinois Supreme Court, that the meas ure of recovery against an indemnity company is not limited by the amount in its policy for the benefit of assured, where the company insists upon taking an appeal, and the judgment exceeding the amount of the policy is affirmed. 86 Cent. L. J. 2. This Court held that the situation justifies taxing interest on the policy's amount to final judgment against the company.

The Minnesota theory is extended in a case decided by its Supreme Court, where an in

demnity company undertook to defend, but, be-cause of a dispute with assured whom the company charged with seeking to aid plaintiff in a suit for recovery in a case covered by the policy, notified it it would not participate in the trial and, in fact, left it to the assured to conduct its own defense. By agreement with the plaintiff in the former suit, the insolvent assured sued the indemnity company with the employee to take proceeds of the recovery, if any. Standard Printing Co. v. Fidelity & Deposit Co., 164 N. W. 1022.

The Court said: "Defendant contends that by withdrawing from the defense of the action after it had once assumed the defense, it took itself out of the rule of the Adan case. The jury found that the conduct of defendant in withdrawing from the defense was unwarranted. Our opinion is that when defendant once assumed the defense of the personal injury action, it made an election that was irrevocable except for cause, and that defendant could not by any unwarranted conduct on its part place itself in a better position than it would have been had it gone ahead with the defense it had once assumed."

Had the Adan case held that the right, under contract, to control the defence and not the actual exercise of such right, made the indemnity company liable to the judgment creditor in a personal injury action, the question of estoppel would not come in at all. But when the exercise of the right creates the liability to such a creditor, we think this means a substantial exercise of such right. Here there was no participation in the trial at all. There was preliminary investigation and retirement from the case. The plaintiff in the personal injury action was not interfered with in any way.

But, if the assured had any right to recover on its own account, it would seem it had the right to make an assignment of its right of action to a third party, and the arrangement it makes might be deemed equivalent to an assignment. In that event, it could make no difference whether the assignee came under the ruling in the Adan case or not.

PUBLIC POLICY-RECOVERY BY PLAINTIFF NOTWITHSTANDING PARTICIPATION IN FRAUD.-Monroe v. Smith, 165 N. W. 532, decided by South Dakota Supreme Court, was ruled upon the theory that though parties be in pari delicto, yet the principle that courts will leave them as they find them, admits an exception quite elastic in its nature.

Thus in the above case it appears that a newspaper concern conducted a campaign to

procure subscriptions by the giving of an automobile as a prize to one attaining the greatest number. As the campaign progressed and was nearing its close, two contestants were leading. The manager of the contest went to the father of one of them and told him that unless he put up $700 for his daughter her adversary would win. He put up $500 with the understanding that if it landed the prize the manager was to retain the money, but if she lost it was to be returned to him. Then the manager went to the husband of the other party and told him that the former party had put up $600, and for his wife to win it was necessary to put up $450. This he did and secured the prize on final count of the votes. The manager returned the $500 as agreed. The husband of the winner sued to recover the $450. This was necessary as against the $500 provisionaly put up, but unnecessary had no votes been counted in consideration of such sum. All other contestants were beaten independently of this fraudulent arrangement.

The action was dismissed by the trial court because the agreement was a fraud as against all the other contestants and payment of the $450 being unnecessary to protect the interest of the winning contestant, it was money voluntarily paid in perpetration of a fraudulent scheme. This dismissal the Supreme Court re

verses.

The Court said: "A judgment requiring defendant to refund the money paid by Monroe will tend to frustrate the commission of fraud in similar future contests, because it will deter organizations and managers of such contests from tempting contestants to enter into like dishonest schemes. Public policy will be better served by giving notice to the originator and managers of contests that such contests, although legitimate in themselves and in aid of honest business, must be honestly conducted, and that they shall not profit by working upon the cupidity of dishonest contestants. We are therefore of the opinion that upon the evidence plaintiff was entitled to a recovery."

Two well known cases are cited in support of this ruling. Stuart v. Wright, 147 Fed. 321, 77 C. C. A. 499; Hobbs v. Boatright, 195 Mo. 693, 93 S. A. 934, 5, L. R. A. (N. S.) 906, 113 Am. St. Rep. 709. These were horse racing cases where the entire scheme was illegal in its purpose and presented a clearer case of victimizing than the instant case does, which is of an unlawful arrangement within a transaction lawful in its general features. We doubt very greatly whether they support an exception to the rule invoked.

STATE QUARANTINE LAWS AND REGULATIONS-VALIDITY OF AS APPLIED TO INTERSTATE COMMERCE.

In Hannibal, etc., R. Co. v. Husen,1 plaintiff had recovered damages resulting from the communication of Texas fever to his cattle by cattle conveyed into Missouri in violation of the Missouri statute which prohibited the bringing into the State of Texas Mexican or Indian cattle during eight months of the year. This statute was held to be a burden upon interstate commerce and unconstitutional, in that it went beyond what was necessary for the protection of the state.

a

In Missouri, K. & T. Ry. Co. v. Haber,2 the action was brought to recover damages by reason of the communication of Texas fever to plaintiff's cattle by cattle brought into the state by the railroad company. The action was based upon a Kansas statute which provided that it should be misdemeanor for any person between February 1 and December 1 of any year to bring into the state any cattle capable of communicating Texas fever; that any person violating the act should be liable to the person injured by the communication of said disease, and that proof that the cattle were brought into the state from south of the 37th parallel should be taken as prima facie evidence that the act had been knowingly violated (with an exception not necessary to state). Defend ant claimed that the state statute was a burden upon interstate commerce and that Congress had so acted upon the subject matter as to nullify the state legislation.

The federal act (of May 29, 1884) provided for the establishment of a Bureau of Animal Industry, charged with the duty, under the instruction of the Commissioner of Agriculture, of investigating and reporting upon (among other things) the meth

ods of suppressing and preventing the communication of animal disease. The Commissioner of Agriculture was further required to prepare rules for the suppression, etc., of such disease and certify same to the state governors and invite their cooperation and when the state and federal authorities should agree upon plans and methods in the premises, the Commissioner of Agriculture was authorized to expend money appropriated by the act in taking such quarantine measures as might be necessary. It was further provided that no railroad company should transport in interstate commerce any live stock affected with communicable disease and that no person should knowingly deliver such live. stock to any railroad company.

The Supreme Court upheld the statute. It said (p. 623):

"May not these statutory provisions stand without obstructing or embarrassing the.execution of the act of Congress? This question must of course be determined with reference to the settled rule that a statute enacted in execution of a reserved power of the State is not to be regarded as inconsistent with an act of Congress passed in the execution of a clear power under the Constitution, unless the repugnance or conflict is so direct and positive that the two acts cannot be reconciled or stand together."

Further (after referring to the scope of the federal act) (p. 623):

"The act of Congress did not assume to give any corporation, company or person the affirmative right to transport from one State to another State cattle that were liable to impart or capable of communicating contagious, infectious or communicable diseases. On the contrary it was made a misdemeanor to deliver for transportation or to transport or drive from one State to another, cattle known to be affected with contagious, infectious or communicable dis

eases.

And the court went on to point out that the federal act did not deal with any question of civil liability for causing damage to the owners of domestic cattle by the in

troduction of cattle under circumstances which would violate the state statute and that neither the federal act nor any regulations established thereunder undertook to give any protection from such liability.

The cattle had been received by the initial carrier at a point outside the "infected district" as defined by the federal authorities but were by defendant carried through

such district. The court said that the federal regulations may have been fully complied with but that even so no protection was afforded against the liability imposed by state law, which was in aid of the objects which Congress had in view when it passed the Animal Industry Act.

The court discussed the Husen case, supra, saying that the statute in that case was condemned because it went beyond the necessities of the case, while in the instant case the statute was passed by the State within the limits of what was needed for self protection, not excluding all Texas cattle but merely imposing a responsibility in damages upon one bringing in such cattle if it communicated disease. Further on the court carefully pointed out that it construed the state statute as not imposing liability if the defendant could show that he did not know that the cattle were liable to impart diseases and could not by the exercise of diligence have discovered it.

In Rasmussen v. Idaho,3 Rasmussen was convicted under a statute of Idaho and proclamation of the Governor. The statute required the Governor whenever he should believe that scab or any other infectious disease of sheep existed in any other state to designate such localities and prohibit the importation into Idaho of sheep from such places except under such restrictions. as he might deem proper. The Governor accordingly issued a proclamation forbidding for 60 days the importation of sheep from certain designated territory in Utah

and Nevada. The court upheld the conviction as against the contention that the authority therefor violated the Commerce Clause. It found the statute and proclamation to be reasonable and not subject to the objections which had led to the condemnation of the state statute in the Husen case, the Idaho statute authorizing the embargo only after investigation and the Governor having in his proclamation acted upon reasonable grounds and gone only so far as the defense of Idaho's sheep industry reasonably required. No question of federal legislation was discussed or (apparently) involved.

In Reid v. Colorado, Reid was convicted under a Colorado statute which provided that it should be unlawful for any person to bring into the State any cattle or horses from a State or country south of the 36th parallel unless such cattle or horses had been held north thereof for 90 days previous to their importation into the State or unless a certificate had first been secured from the state authorities. Reid had secured a certificate from a federal inspector but had ignored and violated the state requirements.

The case involved the same provisions of the federal law (act of May 29, 1884) as have been noted in the discussion of the Haber case. The Supreme Court affirmed the state court's decision upholding the conviction. It declared that any rule which Congress made was paramount and that when "the entire subject of the transportation of live stock from one state to another is taken under direct national supervision and a system devised by which diseased stock may be excluded from interstate commerce, all local or state regulations in respect of such matters and covering the same ground will cease to have any force, whether formally abrogated or not," but the court declared that "Congress has not by any statute covered the whole

(4) 187 U. S. 137. (5) Supra.

subject of the transportation of live stock among the several states and except in certain particulars not involving the present issue, has left a wide field for the exercise by the states of their power, by appropriate regulations, to protect their domestic animals against contagious, infectious and communicable diseases."

In support of this view, the court took up the provisions of the federal act and construed them as not evidencing any intention to prevent the state from taking measures to protect their live stock industry. In discussing these matters the court remarked (p. 148):

"It should never be held that Congress in-. tends to supersede or by its legislation suspend the exercise of the police powers of the States, even when it may do so, unless its purpose to effect that result is clearly manifested. This court has said-and the principle has been often reaffirmed-that in the application of this principle of supremacy of an act of Congress in a case where the state law is but the exercise of a reserved power, the repugnance or conflict should be direct and positive, so that the two acts could not be reconciled or consistently stand together."

commerce

Referring to the provision of the federal law prohibiting any person from transporting any cattle in interstate known to be affected with communicable disease, the court pointed out that this did not cover the entire subject of transporting diseased cattle in interstate commerce and left the state free to adopt and enforce further precautions of a reasonable nature such as were contained in the Colorado statute.

In Asbell v. Kansas, Asbell was convicted of the violation of a Kansas statute

prohibiting any person from transporting into the state cattle from any point south of the south line of the state, except for immediate slaughter, without having first caused them to be inspected by the state or federal authorities. This case brings in the

(6) 209 U. S. 251.

federal statutes of February 2, 1903,7 and of March 3, 1905. The court declared (Mr. Justice Moody delivering the unanimous opinion of the court) that the only parts of the said acts that need be considered were the provisions of the act of 1903. The decision (affirming the state court) will be made clear by a quotation from the opinion (pp. 257-8):

* * *

*

"In that law (of 1903) it is enacted that when an inspector of the Bureau of Animal Industry has issued a certificate that he has inspected cattle or live stock and found them free from infectious, contagious or communicable disease, 'such animals so inspected and certified may be shipped, driven, or transported * * * into * * any State or territory without further inspection or the exaction of fees of any kind, except such as may at any time be ordered or exacted by the Secretary of Agriculture.' There can be no doubt that this is the supreme law, and if the state law conflicts with it the state law must yield. But the law of Kansas now before us recognizes the supremacy of the national law and conforms to it. The state law admits cattle inspected and certified by an inspector of the Bureau of Animal Industry of the United States, thus avoiding a conflict with the national law. Rule 13, issued by the Secretary of Agriculture under the authority of the statute, is brought to our attention by the plaintiff in error. It is enough to say now that the rule is directed to transportation of cattle from quarantined States, which is not this case, and that in terms it recognizes restrictions imposed by the State destination. Our attention is called to no other provision of national law which conflicts with the state law before us, and we have discovered none."

The decision in this case was made in the face of the provisions of the federal law which are now to be mentioned (and which are still in force).

1. Act of 1903.-An Act to Enable the Secretary of Agriculture to More Effectually Suppress and Prevent the Spread of