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Four Main Phases of Engineering Law

A Thesis Submitted to

The Faculty of
MICJIGAN STATE COLLEGE
of

AGRICULTleE AND APRLIED SCIENCE

Candidate for the Degree of

Bachelor of Science

June lauO

/

FOUR MAIN PEIASES OF EITGIIU'IERING LAW

Introduction

Prior to the official introduction of this thesis, allow the writer to
humbly entreat of the Gods for an endowmen , as to wisdom, courage and an
unfaltering ambition to contribute materially to the engineering profession,

a contribution, really worthy of such a profession. It is not the purpose
of this thesis to present a complete and unerring treatise of my subject;
nor is it the purpose of this thesis to achieve unprecedented success in a
literary sense, such is not my fate. '

Before any piece of literature can be condemned as a failure or applauded
as a success, it is essential to familiarize oneself with the degree of ex-
pectation or magnitude of the purpose, sought by the author. My purpose is
simple and may superficially be questioned as to whether such an intention
warrants the time and effort bestowed upon it.

I wish to build, no, not literally as in an engineering sense, but fig-
uratively as in a didactical sense. If I could add just one little increment
to the stere of knowledge of my fellow engineers, if I could aid in sculpturing
just one minute impression in their monument of fame, if I could accomplish
this, I would feel as if my efforts have not been in vain. Let not the reader
misinterpret me, for to pretend the forthcoming treatise is information not
to be found elsewhere would be to defeat my purpose and be an utter falsehood.
This thesis is just a brief collection or it may be nomenclated a.recapitur
lation of various phases of law, which in my estimation, are vital to our
profession. Perhaps I am overly Optimistic as to the value of this thesis,
if so, criticise not too harshly, for the world is suffering from the lack

of such Optimism, ..but if in a two hour period a colleague of mine can in-

-11-.

536688

telligently understand the problems of the legal profession and in many re-
spects their intimacy or association with ours, I will be tempted to call it
a success. It is true, literally speaking, a man cannot be both a lawyer
and an engineer; it is posssible, however, to attain credentials to that
effect, but in the final analysis a man can either build, in a material
sense, or plead their causes; he cannot do both.

It is granted, however, a men can both build and supervise and it is
this supervision, and the world has suffered from its deficiency, that a know-
ledge of law will more fully enable an engineer to successfully execute.
The realization of this association is imperative, for in reality the engineer-
ing profession owes the world an obligation. Its machines of necessity, of
convenience and of war have created and brought to the fore, the complex
problems of modern life. Their task is not complete with the design, with
the technical problems, but the engineer must go on to supervise and to re-
‘gulate the prodieies of his mind not to the dereliction, but to the aggrandize-
ment of posterity.

If the history and evolution of various phases of law are briefly dis-
cussed it would be expedient to justify their purpose. It is only to en-
hance the reader with a greater background and thereby aid in permanently

retaining the current material in his mind.

~iii—

31-34111 LET DOE-1A1};

Eminent Domain is the power inherent in a sovereign state, of taking
or of authorizing the taking, of any property within its jurisdiction for
the public good.

The origin of the power of eminent domain is lost in obscurity, since
before the title of the individual preperty owner as against the state was
recognized and protected by law, the right to take land for public use was
merged in the general power of the government over all persons and preperty
within its jurisdiction. Under Roman law the rights of citizens were re-
garded with such respect that it is extremely doubtful if the taking of
their preperty was authorized by law, and yet the aqueducts and straigh
military roads seem to indicate the existence of some form of compulsory
power. With the downfall of the Roman Empire, all traces of the power of
eminent domain disappeared for centuries, because under the feudal system
all land was held under a tenure which rec0gnized the ultimate ownership
of the sovereign and would not involve the appropriation of preperty for
the construction of a public improvement in its modern sense.

Prior to the year lEhh little was done in England to indemnify an
individual for the confiscation of a portion of his preperty for public use
or benefit, especially if the benefit was in the form of a national defense
such as the building of better roads to hasten the transportation of troops
and supplies or the constructing and enlarging of wherves to facilitate
larger and a greater number of ships. In the year lSMh the city of London
was granted power by Parliament to enter upon and apprOpriate private pro-
perty for the purpose of supplying the city with water, and the provisions
of just compensation determined by appraisers appointed by the Chancellor.
In the year 1765 Blackstone said, referring to the absolute right of private

prOperty inherent in every Englishman and to the provisions of the Magna

Charta that no freeman should be divested of his freehold but by the judg-
ment of his peers or the law of the land, "So great, moreover, is the re-
gard of the law for private property that it will not authorize the least
violation of it; no, not even for the general good of the whole community";
but Blackstone goes on to say, ”the law permits the legislative body and
the legislative body alone to interpose and compel the individual to acou-
iece. But how does it interpose and compel? By giving him full indemnifi-
cation for the injury therefore sustained."

In France before the revolution the power of eminent domain in its
modern sense was not recognized; property was apprOpriated for public use
without any compensation. In the year 1789, the Declaration of Rights and
a little later the Code Napoleon, provided that no one could be deprived of
his prOperty unless public necessity plainly demanded it, and then only upon
the condition of a just and previous indemnity.

The primary objective for the exercise of eminent domain in a nation,
state or community is the establishment of roads. When the American colonies
were first settled, the situation in respect to roads was just the reverse
of what it was in England; there were no roads; the land was wholly unsettled
and unimproved and not allotted to private ownership; therefore the power
of condemnation was unnecessary. A route could always be found without any
trespassing of private property, and even if in a few cases it was necessary,
with thousands of miles of unoccupied available land, land had no substantial
value per square foot; thus it was possible without serious objection to
acquire the necessary prOperty without compensation.

As the colonies were further settled, various colonies were influenced

to a considerable degree by the English practice of inquest by jury; the writ

-2-

of ad quod damnum ( to have damages estimated before construction begins

by the party promoting the construction ) was used and continued to be used
until long after the revolution. The Code Napoleon continued in force in
the state of Louisiana after its acquisition by the United States, and un-
doubtedly this has had an important effect upon the constitutional law of
eminent domain in this country.

Next to the construction of roads, the most important purpose for the
exercise of eminent domain in the colonial period was the erection and main-
tenance of mills. ihere were two distinct differences among the colonies
with respect to the rights of mill owners.

In the New England states such as Hassachusetts, Delaware and Rhode
Island, there were statutes to the effect that a mill owner had to own_
both sides of a stream before he could legally construct a dam, and what-
ever dameges caused upon riparian land were treated merely as a regulation
of conflicting rights of the different riparian owners in the stream. If
a riparian owner was damcred, he had to apply to the court for the issue of
a warrant for injury, and to make an appraisal of his yearly damage.

In the southern colonies such as, Maryland, Virginia and North Carolina
the statutes authorized a person owning a mill site on one side of a stream
not merely to flood the land of the upper riparian prOprietor, but to take
by eminent domain an acre of land on the Opposite side for the abutment of
his dam. The southern statutes required the suing out of a writ of ad quod
damnum by the mill owner, and thereby making the institution of proceedings
to the owners of he land one of a respondent (same as a defendant in a court
of law).

In short, the history of eminent domain in th American colonies seems

to sustain the doctrine that the power of eminent domain as untr.nmelled by

-3-

constitutional limitations extends to the taking of any property within the
jurisdiction of the state for the public good, subject only to the moral ob-
ligation of making compensation.

After the revolution when our colonies broke from their mother country,
and the Articles of Confederation were agreed upon, each state of the con-
federation was sovereign with the exception of a few powers delegated to the
federal government. The power of eminent domain was still endowed in the
state as it had been before the revolution in the colonies. The new states
on being admitted to the union came in with all the sovereign powers of the
old one.

The downfall of the Articles of Confederation was followed by the present
Constitution of the United States which specifically delegates to the federal
government in the Fifth Amendment the power of eminent domain. The latter
part of this amendment which was ratified in the year 1789, as part of the
Bill of Rights, reads as follows, “an individual shall not be deprived of
life, liberty or property without due process of law; nor shall private
preperty be taken for public use without just compensation". The Constitution
of the United States at ratification did not specifically state the position
of the individual states in regard to the power of eminent domain, but the
state constitutions themselves in the majority of instances specifically
stated their limitations with regard to prOperty. After the Civil War the
Fourteenth Amendment to the Constitution of the United States was ratified
which restricted the state to the extent that no state shall make or enforce
a law which shall abridge the privileges or immunities of the citizens of the
United States; nor shall any state deprive a person of life, liberty or
preperty without due process of law, nor deny to any person within its juris-

diction the equal protection of its laws.

-h-

Prior to the year 1831 the condemnation of prOperty by the state and
federal governments haS'been construction by these same parties (with one
exception such as previously mentioned, when a few states permitted the
private owner of a mill certain powers on the banks of a stream). The im-
provements have been without a doubt a public benefit, if not a private cone
venience as in the case of the draining of swamps and marshes and the intro-
duction of water supply systems; then as a public canvenience as in the case
of the construction of roads and canals. of wharves and basins which brought about
general prbsperity due to the increase in trade and commerce.

Prior to this time there had not been any firm stand of the courts on
the granting of the power of eminent domain to a private corporation.

In the year 1831 there arose litigation between Beehman and the Sarat05a
and Schenectady Railroad Company. Beekman secured a temporary injunction to
restrain the Saratoga and Schenectady Railroad from crossing his farm, and
the issue was now whether this injunction should be permanent. The railroad
failed to negotiate a purchase of he desired right of way; so it resorted
to eminent domain. The land was appraised and the money equal to the appraisal
was deposited in a bank. Beehman claimed he had full title to his prOperty
and the legislative act granting the right of eminent domain to a private cor?
poration was unconstitutional. The railroad replied that the legislature had
this power; since all the land was originally owned by the sovereign, it had
the right to "retahe" through prOper legal procedure. This includes com-
pensation.

The chancellor held that the lezislature had the rifht to retake the

property with just compensation, if it could be proven that a public interest
required that it should be taken. This is regardless of the fact that the

benefits to the public are effected through the medium of a private corporation.

-5-

It is upon this principle tnat the legislatures of certain states allowed the
condemnation of the lands of individuals for mill sites. It is objected that
a railroad differs from other public improvements, particularly from roads

and canals, because the public cannot use their own vehicles, and the railroad
is unlimited as to the toll they can charge. But if a railroad will enable
one to travel from one place to another without the eXpense of a horse and
carriage, he derives greater benefit from the improvement. If a farmer can

4'

transport to market his produce by railroad at half the price which it would
cost him to carry it by his own horse and wagon, it is indeed a benefit. If
an individual is so unreasonable as to refuse to permit a railroad to go
through his lands, the legislature may lawfully appropriate a portion of his
prOperty for this public benefit or may authorize an individual or a cor-
poration to appropriate it upon just compensation to the owner for the dama:es

sustained.

Injunction denied.

From the year 1831, after the court upheld that the power of eminent

domain should be given to a railroad, to this day, it has been interpreted

(D

that such private corporations as public utilities and trolley car companie
should be placed in the same category as the railroad. This interpretation
was indeed an expedient policy, for it is this contribution to private cor-
porations that we can acclaim our vast network of both our transportation
and communication lines, and our vast underground network of lighting and
heating conduits. One reason this United States of America is the greatest
country in the world today is without a doubt due to the concessions granted
by our courts to private initiative. Did the courts discriminate against

small prOperty owners? Ho, the courts only granted the power of eminent

domain to that private initiative whose growth or germination had an incite
to a public good.

In the past fourty years there has been increased litigation confronting
our courts which varies somewhat from the disyutes evolved from the usual
routine requests, for the granting of the power of condemnation. It will not
be nossible for the writer to generally summarize or characterize this ad-
ditive divergence from the routine other the. the citins of particular s‘tu-

ations and th point of law which decided this particul

p;

r dispute, one way
or the other. The citation of these cases should prove exceedingly inter-
esting because it should enable one to understand our current problems and

O

policies regarding eminent domain with greater clarity.

Clark v. flash

198 U.s. 361; kg L. 31. 1085; 25 5. Ct. 676, u Am. Cas. 1171 (190:)

Lee L. Clark had an irrigation ditch, 18 inches wide hr 12 inches deep,
which bronrht water to his farm, all located in the arid portions of the
State of Utal. E. J. Nash had riparian rights in the same creek, and sought
to widen Clark's ditch by 12 inches and offered to pay his share of the
Operating exnenses of the new ditch. flash showed that owing to the tOpog-
raphy of Fort Canyon Creek, it was impracticable to build a second ditch to
Hash' s farm.

The Utah court allowed Nash to condemn the prOpertv of Clark, and widen

the ditch to a capacity which will enable sufficient water to flow to the
lands of both flesh and Clark.

Clark appeals to the Supreme Court of the United States.

Justice Pechham contends that the condemning of preperty to enlarge a
ditch across the land of the plaintiff, (Clerk) for the purpose of conveying
water to the land of the defendant, (hash) is not a public good or benefit.
Therefore according to law it cannot be legally done.

It is charged that there is a law among Utah state statutes which permits
a man to condemn the preperty of another, and to dig a ditch across the pro-
perty, and convey a prOportion of the available water equivalent to his ri-
parian rights. This statute is unconstitutional in reality, but in the state
of Utah, and states of similar circumstances, where irrigation is the dif-
ference between valuable land and worthless land (this is true of mining as
well as farming), it would be necessary to enact such a statute in order to
make as much of the land humanly habitable as possible. We therefore contend
that the statute is valid, and that the lower court ruling in favor of hash
is also affirmed.

Justice Peckham goes on to say that it is not the desire of the supreme
court to be understood that because of this decision, it approves of the
broad preposition that prirate prOperty may be taken in all cases where the

taking may promote public interest and tend to develope the natural resources

of the state.

-8-

fi

rrancis Jones and Co. v. Venable

120 Ga. 1; h? 3.3. 5M9; 1 Ann. Cas. 135 (190k)

Francis Jones and company brought an action to condemn land of W. H.
Venable for a private railroad to bring out granite from the Rock Chapel
Mountain Quarry to the Georgia railroad. The company admitted that it would
be a private railroad, but claimed a right of eminent domain under Georgia
laws; because of the necessity to take this particular route. Venable secured
an injunction in the lower court to restrain the company in its condemnation,
and the company now appeals.

Justice Fish contended that the question is whether a person or corpora-
tion actually engaged in the business of quarrying granite or other stone,
and who needs, for the successful prosecution of such a business, a right of
way for a private railroad across the lands of others, may in case of neCessity
acquire a right under condemnation proceedings.

The lower c urt granted the injunction contending that the law which
permitted a private person or corporation to condemn the land of another for
the building of a private railroad for the hauling of granite from a quarry was
unconstitutional.

The law was interpreted as such; therefore the injunction is justly
granted. But the lower court has errored, in that the constitution of the
state provides: In case of necessity, private ways may be granted upon just
compensation being first paid by the applicant. The constitution does not
explain private ways and the power of condemnation through necessity is
therefore the only limitation which must be determined by the court. 'If the
railroad is necessary and in this case it is, the decision is reversed; thereby

lifting the injunction.

Few York City Housing Authority v. Muller

270 r.Y. 333: 1 3.3. (2d) 153; 105 A.L.R. 905 (1936)

The flew York Housin: Authority was proceeding on a large scale housing
project in Yew York City and was exercising its right of eminent domain to
acquire title to certain prOperty. The defendant (fiuller) questioned the
right of the plaintiff alleging in part that the state statute was uncone
stitutional since the apartment would not be for such public use as is required
by the legitimate exercise of the right of eminent domain.

Justice Grouch contended that as the-purpose of this housing program
was to build large apartment buildings to alleviate the huge slum area prevalent
in few York City, and as the slum area was unquestionably a breeding place of
disease, juvenile delinquency, crime and immorality, and which not only takes
its toll upon the denizens of it but affects every citizen throurhout the city,
state and nation, it is indeed measured by the public health, welfare and safety.
The right of eminent domain in this instance is exorcised through public benefit
and public use and within the law. Judgement for the Kew York City Housing

Authority.

Pittsburgh and West Virginia Gas Company v. Cutright

83 v. Va. he; 97 s. E. 686 (1919)

The Pittsburgh and West Virginia Gas Company attempted to condemn a pipe
line right of way over the land of M. R. Cutright, through the right of eminent
domain. The pipe line was designed to serve a few customers, but also to take

the gas through a gasoline plant. It was admitted that service to customers

-10-

was a prOper public use to support the right of minent domain. The comp.ny

maintains that the private use, if it is such, is merely incidental to th

public use. From the judgement for cutrirht the gas company now appeals.
Justice Miller: The sole and only question here presented is whether

the particular strip of land, sought to be taken, is for a public use or only

for the private use of the petitioner. It is admitted that the purpose for

which gas is gathered at a compressor station is to pump it on to the gasoline

n

plant. It is also admitted that having reached the gasoline plant water and

other liquid substances are removed. The removal of these substances is im-

perative; to convey to the public the purest quality of gas; to alleviate clog-

ging and gas leakage which would from time to time cause interruptions in
service, and to decrease the cost of maintenance and increase the life of the
pipe line. It therefore constitutes a public benefit, which is incidental to
a private use, to condemn prOperty to lay a pipe line between the compressor
house and the gasoline plant.

Decision reversed and with order to proceed with condemnation.

James v. Dravo Contracting Company

302 v.5. 15k; 82 L.3d. 155; 53 s. Ct. 205; 11k A.L.R. 31s (1937)

The Dravo Contracting Comiany built certain dams for the United States on
the Kanawho River in West Virginia and E. K. James, a state tax commissioner,
levied a tax of $135,7bl.“l, as 2 percent of the gross sun received by the co—

mpany from the United States. The tax was attached as being in effect a levy

on the Operations of the federal government by a state, which incidentally raised

-11...

.3

the question of the federal rijht to take property by eminent domain for

*fi
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O
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I

federal puryoses. Bravo secured an injunction restraininr James
lecting the tax, and James appeals

M‘

Justice Hughes contends that .e issue is not the le_a lity f the pox:er
of condemnation, of state pronertz, by the federal government. The issue as

to t1 9 validitv of t? is power by virtu, of the sovereignty of the federal gov—

been deter mired ov previous C? see such as the Kohl v. United

(1')

ernment ha
States and many others.

The contention that a tre.sfer of legislative jurisdiction carries with
it, not only the benefits but also the obligations, is true, but one should
not neglect the fact the t just as the states reserve 3m sdiction for local
purposes. such as in counties and municipalities; so should the United States
reserve jurisdiction for purposes within th e state, especially as fovernner tal

activities are being expanded and larger and larger areas acquireo.

Judgement is affirmed.

q

Shedd v. Eorthern Indiana Public Service to.
206 11111. 35; 188 11.111. 3217; 90 11.11.11. 1020 (1.9311)
The Horthern India na Puolic Service Companv Drou3ht an action to con-
demn certain lands of Charles B. Shedd by the right of eminent domain.
Shedd set up the defense that the transmission line rixht of wa" in _uestion
would serve customers in Illinois, and was therefore not a public purpose in

Indiana. The com . any replied, that the requirement of public use :as met

-J

when some customers in Indiana were served, and that the use di not have to

be exclusively within the state of Indiana. From the jud:ement for the com-

-12-

pany, Shodd now appeals.

Justice Hughes: It has been presented that the state of Indiana has no
power of eminent domain for uses constituting interstate commerce over which
the United States alone has sovereign right of control and regulation. This
proposition as it stands is correct, but when viewed further a different sit-
nation is presented. If the state possesses the power of eminent domain for
uses over which it has sovereign rights of control and regulation, does the
mere fact that an electric power plant, such as the one in question, transports
and sells its output to other states affect the power of eminent domain of
that state? It does not.

As stated in the appellant's brief the evidence shows that one of the
proposed uses of the land sought is to provide for transmission lines for the
transmission and sale across the state line to the commonwealth Edison com-
pany and the Public Service company, this electricity to be generated by the
appellee company at its proposed station at Michigan City, Indiana.

The answer to the foregoing question is stated in the rule of law given
in the case of the Columbus Waterworks company v. Long, wherein the court
said:

It is clear that the right of eminent domain should not be denied where
public uses are to be subserved in the state granting condemnation. because
in connection therewith, public use in another state may be likewise promoted.
A state should not refuse to exercise its right because the inhabitants of
a neighboring state may incidentally partake of the fruits of its exercise.
Such refusal would violate the principles of Just public policy and the neigh-
borly comity which should exist between states.

The case of Washington.Water Power company v. Waters also confirms this
rule of law.

The question in this case is: Is the use a public use within this state

-13-

and does it serve the interests of the state? The question must be answered
in the affirmitive, for the fact that the state of Indiana is in such prox-
imity with the state of Illinois, that benefits to the state of Illinois
will indirectly promote benefits to the state of Indiana.

The special findings of facts and the evidence in this case show that
the use for which the preperty is taken is a,public one, and the fact that
the peOple of another state may also be benefitted will not defeat the right
to condemn.

Judgment affirmed.

Panhandle Eastern Pipe Line Company v. State Highway Commission
29!: 11.5. 613; 55 s. Ct. 563 (1935)

A statute of the state of Kansas gave the State Highway Commission
authority to order bridge abutments, wires and pipe lines moved to other
locations. After the Panhandle had put in its 2M inch high-pressure pipe
line, the highway department relocated a trunk road, thereby crossing the
pipe in question. It ordered the pipe line altered. the company refused, and
finally the commission got a mandamus from the Supreme Court of Kansas dir-
ecting the Panhandle to move its line at its own expense ($5000). The P339
handle now appeals to the Supreme Court of the United States, charging that
the state statute is unconstitutional if applied to this case. The Panhandle
says this is taking preperty without due process of law and it also said it
would be willing to move its pipe line when it was given the $5000. The com-

mission says it has the right and the authority to order sudh a change. The

-lh-

commission further contends that this is similar to railroad cases, where
police power could always be used for public safety. The Panhandle replies
that this case comes under the field of eminent domain with just compensation
as guaranteed under the Fourteenth Amendment of the U. 5. Constitution.
Justice McReynolds: We cannot accept the view that under the Federal
Constitution, the appellant's transmidsion lines are upon the same footing
as railroads, for a railroad crossing represents a hazard while a.twenty-four
inch high pressure pipe buried beneath the ground is not a constant hazard
to vehicular travel. When the railroads obtained permission to occupy certian
property, it did so with the understanding that it was subject to reasonable
legislation to prevent danger. This would apply to the appellant, but hazard
was not disclosed as being the cause for the alteration of the pipe line.
With respect to the constitutionality of the Kansas statute, it cannot
be questioned that police power is necessary to regulate various traffic
problems, but there must be an implied limitation to the police power of this
act, for beyond a certain extent, there must be an exercise of eminent domain
and compensation to sustain the act. We are in danger of forgetting, that
a strong public desire to improve the public condition, is not enough to war-
rant achieving the desire, by a short cut, than the constitutional way of
paying for the change. It is the governmental power of self-protection and
permits reasonable regulation of rights and prOperty in particulars essential
to the preservation of the community from injury.

Decision for the Panhandle.

State ex rel. Chelan Electric Co. v. Supreme Court

1112 Wash. 270; 253 r. 115; 58 A.L.P.. 779 (1927)

A lower court refused to proceed with condemnation proceedings, because
the petitioner, the Chelan Electric company, planned to sell part of its
electricity to private manufacturers. The company brings the present appeal
to have the case reviewed, claiming that their general business, including
the electricity for industrial purposes, meets the requirements of public use.

Justice Ashen: The use for all the purposes mentioned has heretofore
by our decisions been declared to be a public use. Although our decisions
have not been construed as applying to various domestic appliances such as
heating, cooking, washing machines, ironers and other electrical devices, it
cannot be doubted that such uses are public.

The balance of generated power will be applied to uses which.we have
heretofore held to be private such as mining and manufacturing. A.few manna
facturing purposes are: refrigeration in stores, cafes and butcher shops:
repair and sewing machines in shoe repairing shops and in dressmaking and
tailoring shops; clippers and vibrators used by barbers, sterilizers and
X-ray machines used by medics and dentists; there are innumerable electrical
appliances in all walks of life, a few were mentioned Just to illustrate.

It is therefore a Just contention that due to the changed conditions
of society, generated power for the foregoing mentioned purposes are a.public
use and benefit. We hereby overrule whatever prior decisions which seemingly
present the viewpoint that water power is not devoted to public use when
applied to mining and manufacturing purposes.

Judgment reversed and direction to proceed with condemnation.

~16-

There is little doubt that the power of eminent domain has evolved from
a strict interpretation to that of a liberal one, as the need for such an
interpretation was evident. An example of this liberalism is evidenced by
the decision of the New York Supreme Court granting the power of condemnation
to the New York Housing Authority. IThe ever increasing social legislation
enacted in the past ten years is approved by the courts if its enactment is
indubitably a benefit. (Let this not be construed to mean such legislation
as the National Recovery Act, N.R.A., which.was categorically experimental.)
With the New York Housing Authority case in mind it would be pertinent to
predict a further extension of power being granted to the sovereign under
eminent domain.

During the past fifteen years due to the mechanical age with its increase
of leisure time and automotive conveniences, more and more of our people are
beginning to travel. The near future will bring about an even greater per-
centage, and this will necessitate vast chains of overnight lodgings, bathing
facilities and various provisions for exercising a fair degree of culinary
art. To provide for these tourists at sites of greatest beauty and health,
it will be necessary to condemn land to attain these particular sites. The
government will then supervise the construction and regulate the management
I so as to prevent any unsanitary and immoral conditions. The rates charged
by the managers of the tourist camps will also be regulated by the government.

The foregoing prediction is purely a personal one and should be discounted
accordingly. Although it is logical to conceive, if the tourist rate is to
continue to increase, provisions will have to be made for the solution of this

problem.

E

QEI‘ISAT I 01

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-18..

During the early period of industrial activity an employee was com-
pensated by an employer only through litigation under the common law rules,
of negligence. It was much the same as our present day claims for injury to
Smith's automobile. Smith must show that Brown was negligent and that
Smith himself was free from negligence. There was probably no greater
probability of recovery in the old industrial accidents than in the present
day automobile accidents.

.A summary of what would have to be proved is as follows:

If the employee was himself negligent and thereby contributed to the
occurrence of the injury, such contributory negligence on his part, pre-
eluded a recovery of damage from his employer for such injury. This rule
was founded upon the theory that each employee should exercise all reason-
able care for his own protection, and should not recover for damages re- -
sulting from his own neglect of his personal duty of care.

He had to prove the employer did not use reasonable care for the
safety of his employees while they were engaged in the performance of his
work. This included all reasonable means and precautions to prevent in-
jury, this means, to the extent that any reasonable, prudent man would
supply if he himself were exposed to the dangers of the servant's position.

The theory of common law negligence did not cause hardship in our
early history, for at this time all our manufacturing units were in the
home. Industry was simple, free from danger; severe personal injury was
a rarity. It was not thoroughly unreasonable that an employee should as-
sume those risks.

These risks gradually expanded to where the skilled workman brought

within his household the workmen under him, but as the latter were men from

the small community itself, known to one another, all their individual

-19-

characteristics were a matter of common knowledge and not especially det-
rimental. But with the invention of the steam engine, and the “Industrial
Revolution“, which gave rise to the factory system and its mechanical
hazards, there was a dire need for a change in policy.

The protection provided to employees waned as the need for it grew,
for the courts added the limitations that they would presume the contract
between the employer and the employee contemplated and designed to mean
that the employee would assume the responsibility of any special or unusual
risk, where he either knew of its presence or it was his duty in the course
of his employment to find out. The ordinary risks which.were incidental to
his employment, and which he could avoid with ordinary care on his part,
were perils he could guard against as effectively as could the master.
These were perils of the service and were provided for in the rate of wage.

If the negligence theory could be proven an employee in a personal
injury suit would be entitled to damages to the following extent:

Medical and other expenses necessitated by the injury.

Financial losses arising from inability to work or earn money due to
disability.

Payment for physical pain and mental suffering resulting from the in-
jury.

In case of death from a negligently inflicted injury, originally the
surviving dependents had no right of recovery. The right of action was re-
garded as being personal to the employee and died with him. Finally a right
of action was given to certain members of the family of the deceased. If
a wife sued, the basis of her damage was the pecuniary loss sustained by

her, due to the withdrawal of her husband's support and society. If suit

-20-

was brought by surviving children, pecuniary loss was involved in the with-
drawal of support, comfort and care.

There were many objections to the theory because assessment of damages
was left to the injured which resulted in a.wide divergence of values.
Trivial injuries frequently resulted in excessive judgment, while severe
injuries were often greatly undervalued. The whims, passions, emotions.
prejudices and temperamental peculiarities of individual jurymen and women
were a potential source of erratic verdicts over which there was little or
no control. The temperamental instability of the collective judgment of
any group, as casually selected as are our juries, is the chief ground of
objection to the jury system. Only too often emotions and not reason control
the verdict.

When it was realized that the old law of negligence was no longer equi-
table a new period began. Attempts were made to remedy the defects of the
common law legislative enactments. Employers' Liability laws were enacted
modifying or abrogating certain doctrines of the common law which.was felt to
be inapplicable to modern conditions. This new legislation made the em-
ployer legally liable for any injury occurring as the result of neglect,
default or wrongful act of any agent or officer of such employer. supervisor
to the employee injured. (Such as superintendents and various grades of
foreman.) However the fundamental concept of liability based upon negligence
of the parties involved was still adhered to. It was difficult for an
injurdd employee to recover any compensation. Litigation was expensive to
both employer and employee. A just employer was fearful of assisting his
injured workmen for fear of admitting liability for the injury. Court costs

and lawyer's fees generally absorbed the benefit of the employee's verdict

if he received one. Unscrupulous attorneys took advantage of the necessities
of the injured workmen to drive hard bargains with them, and in turn sought

to negotiate extortionate settlements with employers. Deserving injured em,
ployees often recovered little or nothing and employers were frequently com-
pelled to pay large judgments for trivial injuries. After a period of ex-
perimentation, it was generally conceded that Employers' Liability legislation
had only served to accentuate the defects of a thoroughly unwise and unjust
system of indemnification. The demand was then for an entirely new phil-
osOphy.

The philosophy of workmen's compensation‘was first deve10ped in Germany,
as a result of political agitation. Bismarck urged the adOption of some
legislation to offset the appeal of the new socialistic doctrines with the
result that in 1381 the first of a series of laws was passed, culminating in
188M in the first accident insurance law.

After Germany's initial effort, other European countries undertook legis-
lative reform in their own efforts to adjust social problems brought about
by the advent of the ”Industrial Revolution". In 1880 England passed its
first Employers' Liabilities act, which abrOgated, but not entirely, the
common law defences of the employer. Their first compensation legislation
of 1897 was amended by an act of 1906 which was further changed in 1911.
Austria adapted the principle in 1887, followed by Norway in 159%. Even
autocratic Russia.had its compensation act.

In the United States the compensation laws differs from that of most
others due to the fact that in this country there are numerous semi-independent
governmental units such as the fortyaeight states and the federal government.

In EurOpe, however, the laws were adopted by centralized national government.

-22-

The Federal government introduced the idea into the United States.
As early as 1882 employees in the Life Saving Service, suffering service
injuries or diseases, were granted certain benefits. In the year 1900 ems
ployees in the Federal railroad mail service injured while on duty were
allowed full salary for one year, and one half salary for the succeeding year.
In the year 1908, a more general law for Federal employees was passed
which remained.unchanged in its rather limited SCOpe for it was limited to
employees engaged in interstate commerce until 1916. In that year a law
applicable to all civil employees of the United States brought greater
benefits. In 1919 this was enlarged to include employees of the government
of the District of Columbia.

The Federal Employee Liabilities Act of 1908 gave definite rights to
employees of common carriers engaged in interstate commerce by rail.- In
1920 seamen were given benefits of the Act of 1908. The Federal Longshoreman's
Act of 1927 was made to apply to the District of Columbia in 1928.

Maryland was the first state to provide for scheduled benefits without
suit and proof of negligence under a cooperative insurance law of 1902.
This was of strict application and was declared unconstitutional two years
later. From year to year vaious states in the Union adopted compensation
laws until up to the present time there are but four exceptions, Arkansas,
Florida, Mississippi and South Carolina.

The philosOphy of workman's compensation adOpted by the major part of
the civilized world completely outlawed the question of negligence.

The compensation acts were founded upon the cardinal principle that
the risk of injury and the financial burden resulting therefrom should be
borne by industry as a.whole rather than fall solely upon the employee involved.

The employer assumes this expense as a part of his cost of production and

protects hinself against this hazard by insurance, the cost of which is

cared for as are taxes, fire losses, depreciation of or accident to machinery
and other industrial equipment. It is in effect, a special tax, and a part
of the operating expense just as truly as is the cost of repairing broken
machinery. It is argued that industry should pay for broken arms and cracked
skulls, even as it pays for broken gears and cracked flywheels. It is all

a part of the expense of Operating the plant.

After years of litigation by employer and employee many employers were
quite favorable to the enactment of various compensation laws. The acts
provided for a definite schedule of awards for various types of injuries,
such as for incapacity to work resulting from injury. Our own Michigan
compensation laws state that the employer shall pay or cause to be paid as
hereinafter provided, to the injured employee a weekly compensation equal
to sixty-six and two thirds percent of the difference between his average
weekly wages before the injury, and the average weekly wages which he is
able to-earn thereafter, but not more than eighteen dollars a week; and in
no case shall the period covered by such compensation be greater than five
hundred weeks from the date of injury. There is also tabulated in detail
the compensation entitled the employee if through injury, he loses a thumb
or any other part of his body; for instance, for a thumb, he is entitled to
sixty-six and two thirds percent of the average weekly wage during sixty
weeks. Just as a machine has the price of all its parts listed, if the
reader will pardon my comparison, the price of every part of our body is
tabulated.

Many states are extending their statutes to include silicosis, hernia

and metal poisoning.

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The typical compensation act affects all employers and employees
engaged in enterprises or businesses declared by the statute to be hazardous.
These individuals are automatically under the act whether they wish to be or
not, without any partiality or discrimination shown to the state, county,
town, township, incorporated village or schooldigtrict and municipal cor-
poration.

The hazardous enterprises are namely these:

1. All construction, including repair, remodeling, removing, demo-
lition and electrical work.

2. Carriage by land or water and loading or unloading in connection
therewith, including the distribution of any commodity by horse drawn or
motor driven vehicle where the employer employs more than three employees in
the business. ‘

3. All warehouse Operation.

h. Mining, surface mining or quarrying.

.5. All enterprises where explosives, molten metals, injurious gases
or vapors, or corrosive acids, are manufactured, used, generated, stored,
or conveyed.

6. All enterprises wherein machinery is used, now or hereafter subject
to statutory regulations.

The statutes are usually administered by a state industrial board or
commission. (In Michigan, a State Administrative Board.)

When the accident occurs the employee must report to the board, and the
employee must make an informal claim within a specified number of months.
The awards may be financed through company funds, by state insurance risks

paid by the company, or through private insurance companies. he rate of

-25-

insurance is determined by accident experience in various occupations. It
is usually computed as a ratio of the pay roll. The company accounts are
audited at the end of the year, to determine the actual pay roll, and ad-
justments are then made in the premium paid. The rate varies as the danger
of the job. For instance, for clerical work the rate may be as low as nine
cents per $100 of payroll and salvage work may have a rate as high as $3h,1h
per $100 of payroll.

The problems of the administrative board or commissioners are these:
it is no easy task in administration to keep workmen's compensation acts
from being overloaded by heaping cases which in fact belong to unemployment
or disease on their docket. Although there has been alleviation due to the
adaption of unemployment insurance by many states.

There are various employers who complain of the expense of workmen's
compensation. Theoretically they have no just cause for complaint as this
expense is passed on to the consuming public, and it is absorbed by the
business itself. This fact may alone have its beneficial results because
they will use greater precautions for the prevention of accidents.

On the part of many employers, there has not been the understanding of
the magnitude of this problem, due to the fact that they have purchased
insurance and they feel that the safety is solely for the carriers. However
a good or bad reaction will reflect itself in insurance rates.

In considering any legislation providing improvements of our compensation
laws or any other laws, if the reader will permit me to generalize, one can
place additional obligations upon industry only when there is an ability to
meet them. Industry incurs certain obligations under the compensation laws.

Its meeting these obligations is as essential as is its incurring them.

-26-

As society's representative, it is the duty of the commission to see that
the rights of both employee and employer are protected; to see that each in-
jured workman receives every dollar its act provides, but no more; and that
payments are made promptly with a minimum of expense and litigation.

To more fully inform the reader, as to the policy of our courts in the
matter of workmen's compensation laws, a diversified series of judicial

decisions folows:

Richardson v. Crescent Forwarding and Transportation Company

135 So. 688, 17 La. App. has (1931)

Monroe Richardson was employed by the defendant as a laborer in load-
ing and unloading trucks. He was injured while doing his work. The com-
pany had not elected to come within the state act, but the commission treated
the work as extra.hazardous, thus justifying the award made. The defendant
appealed, alleging that truck loading is not listed in the law as extra.haz-
ardous.

Justice Higgens: The counsel for the defendant claims that the point
of truck driving, as hazardous, could not be employed because Richardson
was not a truck driver. This is true but his duties brought him into frequent
contact with trucks and upon many occasions required that he ride them.

In this way it was necessary for him to work in or about them, and whether
or not he himself operated a machine is of no great importance.

We agree with the counsel for defense, that the mere fact, that certain

phases of the general work conducted by the master, are hazardous, does not

-27...

result in bringing all employees under protection. For instance, stenog-
raphers, office boys and bookkeepers are not protected if injured, except
through redress under article 2315 of the civil code. But, where certain
phases of work are hazardous and are within the contemplation of the com-
pensation statutes, all employees engaged therein, or necessarily brought
into direct contact therewith, are afforded the protection which the com-
pensation statutes were designed to furnish. The award of the commission

is affirmed.

Lazarus v. Scherer

171+ mm. 293 (1931)

Murray Scherer, a pump repair man, was engaged by H. Lazarus to repair
equipment for the Maumee Oil Company. Lazurus is the owner of the oil com-
pany. Scherer's torch caused an explosion during the work, and the Industrid.
Board of Indiana granted compensation. Appeal is brought alleging that
Scherer's relationship was that of independent contractor, and not employee.

Justice Neal: .As heretofore stated, the appelle, when the work was
finished, rendered a statement to the appellant charging one dollar an hour
for his services. While the mode of payment is not a dedisive test in
determining the relationship between appellee and appellant, yet it must
be considered.

The fact that the appellant could discharge the appellee at any time,
and the appellee could have ceased work when he chose, thus the power of

discharge on the one hand and the right to cease work on the other,

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establishes the fact that the appellee is an employee. The appellee is not
an independent contractor.

The award granted is affirmed.

Security Union Insurance Company v. Mcleod

36 SM. (2d) 1:19 (1931)

A. M. Mcleod was one of the truck drivers employed by J. L. Menefee to
deliver gravel, under a paving contract with.Whitham and Company. Mcleod
was injured and sought recovery under workman's compensation.

Justice Ryan: The process of loading the gravel onto trucks was as
follows: Whitham and Company owned and Operated a crane which lifted the
gravel into a chute; the trucks were backed under and filled from the chute.
This process was under the control of an employee of the Whitham and Company.
As a truck was loaded and after a signal ”to pull out" was given, the truck
driver left the pit with his load and brought it to the place of delivery,
where the truck was unloaded. In unloading, the truck driver, on a signal
from an employee of Vhitham.and Company would back in and "dump the load".

Vhitham and Company exercised no other control over the trucks or
their drivers than as detailed above, in the loading at the pit and the
unloading at the place of delivery.

0n delivery of the gravel, Whitham and Company gave the driver a slip
or ticket which showed the number of yards hauled on that load, which was
turned over to Menefee, who twice a month presented such slips or tickets to

Whitham and Company and was paid for the hauling, at the rate of 75 cents

-29-

per cubic yard, based on such slips or tickets.

Under Whitham and Company's agreement with Menefee, they had no right
to employ or discharge the men driving the trucks, nor to repair the trucks
nor control his men; they never carried these men on their payrolls or
paid them, neither were the men ever reported to the insurance company as
employees of Whitham and Company, nor was any premium paid on them.

We have reached the conclusion that there was not a master and servant
relationship between the Whitham and Company and Mcleod. Maleod was an
employee of Menefee, and had no right to gain compensation from the
insurance company of Whitham and Company.

Judgment for the insurance company.

Foyle v. Commonwealth of Pennsylvania

101 Pa. Super. Ct. 1412 (1931)

Martin E. Foyle, an assistant superintendent of schools of Schuylkill
county, was killed in the course of his employment. The Workmen's Compensa-
tion Board awarded compensation to widow and minor children, but upon appeal
to the court of common pleas the award of the board was reversed. The
claimants, Foyles, now appeal. The whole issue is whether Martin E. Foyle
was an employee within the provision of the state statute requiring the
relationship of "employer-employee".

Justice Gawthorp: From the statutory provisions above recited, it
seems clear that an assistant county superintendent is not an employee of

the commonwealth. His office is created by the legislature, his minimum

-30-

salary is fixed by law, he takes and subscribes to an oath, receives a
commission and cannot be removed in any method other than that provided
by the statutes. It follows that the provisions of the Workmen's Compen-
sation Act do not apply to him.

The dudgment of the court below is affirmed.

Milwaukee Toy Company v. Industrial Commission

231; NM. 7148 (1931)

Justice Fowler: Bayer as general manager of Milwaukee Toy Company
was injured and attempted to gain the consent of the Industrial Commission
for compensation. Bayer's time was consumed to a large extent with work
such as would ordinarily be done by employees plainly within the act.
(This was because the plant is so small.) The term general manager is am-
biguous because it may indicate an executive position or a.person performing
ordinary duties of an employee.

In the case of Miller's Mutual Casualty Company v. Hoover the court
said: the underlying reason for excluding the officers and directors of
a corporation as such from provisions of the act is apparent. The officers
and directors of a corporation do not come within the ordinary accepted
meaning of the terms 'workmen' and 'employees', for whose benefit the
legislation is primarily enacted. Their duties towards the corporation and
its business are those of managing and directing heads. and as a rule do
not perform ordinary tasks, nor are subject to ordinary risks. .As a general

rule, they are not affected by a temporary disability caused by injury.

-31-

Yet with the occupation of an official position with a corporation, does
not in any way exclude them from coming under the Compensation Acts if there
was a substantial reason for including them.

Judgment to Milwaukee Toy Company (Bayer) affirmed.

Todd Dry Docks v. Marshal
“9 F (2d) 621 (1931)

Edward Pittson was a pipe fitter in the employ of the Todd Dry Docks
Incorporated, and was sent into steerage quarters of the steamship "Presi-
dent Madison" to do certain repair work while the ship was temporarily in .
dry dock. The ship had very recently experienced an epidemic of cerebrospinal
meningitis with a resulting long list of deaths among its passengers.
Pittson died of the disease within a week after entering the ship and his
widow placed a claim under the Longshoremen's and Harbor Worker's Compen—
sation Act receiving an award. The Todd Dry Docks, Incorporated, appealed
contending that the affliction did not constitute an "accidental injury or
death”.

Justice Neterer:' The findings of the Deputy Commissioner appear to
be fully sustained by rational and natural inferences from conceded facts,
and are conclusive upon the courts.

The term 'injury' means accidental injury or death arising out of
and in the course of employment, and such occupational disease or infection
arising naturally out of such employment.

The deceased employee died from an infectious disease that arose

-32...

naturally out of his employment. The deceased came to his death through the
pollution of the atmosphere by the infested persons who had worked on steer-
age.

As this statute appears broader than some state statutes, it does
appear under the findings and evidence that the award is within the "accident-
a1 injury" phase, as well. Nb doubt, if the body of the deceased had been
penetrated by the shots from the accidental discharge of a shotgun on the
steerage, from the effects of which he lingered and died of blood poisoning,
an award could be sustained. By the same token, the discharge of infectious
germs by coughing and sneezing on the steerage some of which penetrated the
mucous membrane of the employee, resulting in his speedy death. In the one
case the shot penetrated the muscles of the body, and in the other the germ
penetrated the mucous membrane.

The award is approved.

Rosichan v. Hoses

1?? N.E. 833; MO Ohio App. 25 (1931)

Mary Hoose brought action before the Industrial Commission, on a claim
under the Workmen‘s Compensation Act, for the death of her husband. He was
a warehouse employee of Rosichan and handled baled paper. At the time of
the accident he was standing eight feet from the floor; he suddenly fell,
the fall resulting in his death. The commission denied recovery, and an
appeal was made to the court of common pleas, where extensive testimony was

received concerning the real cause of his death. Some doctors held it was

-33-

the fall, some heart trouble, while some considered it to be a combination
of the two. The court of common pleas granted an award to the widow, and
Rosichan brings the present appeal.

Justice Allread: The lower court found that the decedent died as a
result of a fracture of the skull with cerebral hemorrhage. Prior to the
accident the decedent has had some heart trouble, but the court did not find
any credible evidence that the fall was occasioned by heart trouble. The
decedent's work often required that he stand on bales of paper with his feet
eight feet above the floor, and the work done by the decedent on the morning
of the accident was of such a nature as to be a possible contributing factor
in causing a failure of his heart action, if heart failure was the cause of
his death.

Taking these lower court findings as a whole we cannot escape the view
that the death must have resulted from the employment.

Judgment affirmed.

Union Oil Company v. Industrial Accident Commission

295 P 513 (1931)

Captain Albert Pelle was employed by the Union 011 Company, his duties
consisted of delivering oil to customers in the San Francisco Bay area. At
the time of the accident Pelle was on the wharf, attempting to step onto his
barge when he fell into the water and was drowned. The state commission al-
lowed compensation to the widow, and the oil company appeals alleging in

part that the accident did not "arise out of and in the course of" the em-

-3h-

 

ployment. The appeal stated in particular that Pelle was merely going to
his cabin to sleep for the night.

By the court. With respect to the finding‘that the deceased met his
death in the course of his employment, we are satisfied that the conclusion
reached by the commission should be upheld. The record shows that Captain
Pelle was not required to remain on board the barge that night by reason of
the rules of his employer. It was permissible for him to go to his home
in Oakland, and he might have stayed there and met the barge at a point on.
its itinerary. On the other hand, if he desired to take charge of the barge
at §_A.M. when it was scheduled to leave, it would not be possible for him
to go home for the transportation service would not get him back to the wharf
until 6:30 A.M. It was largely discretionary with the captain as to whether
he would take the barge out or not, but his discretion was exercised in the
best interests of his employer.

It is well settled that, if an employee is required to live or board
on the premises of his employer either by the terms of his contract of em-
ployment or the necessities of the work, an injury received while on the
premises may be compensable, though the employee is not at work at the time
of the injury. In this case, the definite compulsion to be on board was
not a direct order, but it was none the less a compulsion when it arose out
of a required exercise of discretion by the employee himself.

The award is therefore affirmed.

Lovallo v. American Brass Company

153 A. 783, 112 Conn. 635 (1931)

The deceased, Donate Lovello, was employed in the scrap metal depart-
ment of the American Brass Company. At the time of his injury he was work-
ing overtime. The company allowed thirty minutes for supper on company time,
and Lovallo was lighting his pipe after supper when his oily clothing caught
fire and he was fatally burned. The compensation commissioner and the lower
court both denied compensation to the widow, whence she now brings her pre-
sent appeal.

Justice Haines: We are satisfied that the injury must be held to have
arisen in the course of the employment. The deceased was working overtime
for the convenience and benefit of the respondent; the half hour for lunch‘
during which he was injured was part of that overtime for which he was re-
ceiving compensation. He was clearly within the period of his employment.

The act of the deceased in starting to smoke after his lunch was not
merely for his own satisfaction or benefit. The respondent certainly per-
mitted the act for a purpose partly its own, namely, to keep the workmen
.in good spirits for the performance of the duties of their employment.

Even when an employer has no direct interest in the employee's permitted act
of smoking, it has frequently been held in other jurisdictions that it is

a reasonable act common to men generally, ministering to the comfort and
good spirits of the workman, so that the employer has an incidental interest
in it.

Reversed and remanded. Judgment for Lovallo.

Wilhelm v. Angell, Wilhelm and Shreve

23h N.W. M33, 252 Mich. Gus (1931)

Eugene B. Wilhelm was employed by the firm of Angell, Wilhelm and Shreve
as a construction superintendent on a new school in Brighton, Michigan. In
connection with his work he attended a meeting of the board of education on-
July 5, driving out from his home in Detroit. After the meeting, he started
home and when half way there was hit by a train and killed. The widow sought
compensation from the Department of Labor and Industry on the grounds that
her husband was in the scope of his employment. The department denied re-
covery under the workmen's compensation act, and the widow now appeals.

Justice North: If in the discharge of his duties an employee is required
to travel upon the highway or to use any other means of transportation, and
while so doing in the performance of a service to his employer he suffers an
accidental injury caused by his so traveling, he is entitled to compensation.
When engaged in this type of work he should be protected regardless whether
he was journeying to his next placn of service or returning to his business
headquarters or to his place of residence. He should be protected similarly
to that of a salesman.

While it would be difficult to frame a definite test applicable to all
cases, the character of the service rendered by the employee is of prime
importance in determining whether the accident arose out of and in the course
of his employment. In this case the essential causative relation between in-
jury'and employment is established. Mr. Wilhelm's work compelled him to be
upon the highways. His injury can be traced to this risk or hazard to which
he as an employee was exposed in a special degree by reason of his employment.

I We order the commission to award the proper compensation in accordance

herewith.

Costley v. Nevada Industrial Insurance Commission
296 P. 1011 (1931)

W. E. Costley secured employment with a mining company, and took his
camping equipment up into the mountains, to the site of his work. He plan-
ned to erect his tent that night and be ready to commence work the next
morning. While cutting stakes to tie down his tent he accidentally cut his
foot, losing one toe and permanently injuring another. This injury was so
serious that he could not follow his line of work. The mining company denied
responsibility, alleging that Costley had not actually started work in the
mine. Costley replied that putting up his own tent was really a part of the
whole terms of his employment and urged compensation on these grounds. The
Nevada Industrial Insurance Company refused to order an award, and Costley‘
brought action against the commission for $792. The lower court granted this
award, and the commission now appeals.

Justice Sanders: The question to be decided is whether the relation of
employer and employee began before the occurrence? In other words, "Did
the accident arise out of and in the course of the employment?"

The attorney general argues that to constitute an employee as defined
by law, a person must be in the service of the employer under contract of
hire and that Costley at the time of the accident being engaged in the per-
formance of an act independent of the relation of master and servant is
not compensable. This argument is not persuasive.

’ At the time of the accident Costley was not engaged in voluntarily
doing something outside of his employment. Neigher can it be said that his
injury was caused by a fortuitous circumstance unconnected.with the employ-

ment. Under these circumstances we can see no ground upon which to hold

-33-

that the accident in question did not arise out of and in the course of employa
ment.

Judgment affirmed.

Sylcox v. National Lead Company
38 s.w. (2d) 1497 (1931)

Roy Sylcox was employed by the National Lead Company, which concern
Operated a mine where Sylcox worked. The lead company owned and operated
a bus to take the workmen from their homes to the mine. On the night of
the accident Sylcox was getting off the moving bus and received injuries.
Sylcox brought his action in court, before a jury, and received a judgment
for $3000. The company appealed, alleging thé case should be brought under
the workman's compensation statutes.

Justice Bennick: Now in this case the plaintiff did not happen to be
riding home from work on the single occasion through the courtesy of his
employer, but the furnishing of transportation was a regular service, con-
templated by the contract of employment, which the plaintiff was permitted,
as a matter of fact, to use. Having been provided for in the contract, it
was incidental to, and therefore a part of, the employment. Consequently,
when injured, he was at the place where his services demanded him to be,
and such being true, the accident was within the exclusive preview of the
compensation act.

Decision of the lower court reversed.

Morris v. Dexter Manufacturing Company

no 5. w. (2d) 750 (1931)

Benjamin Morris froze his finger during his employment for the Dexter
Manufacturing Company, with the result that amputation was necessary. The
commission denied compensation. and Morris appealed to a circuit court,
which granted compensation. The Dexter Manufacturing Company then brought
this present appeal from the judgment in the circuit court.

Justice Cox: There is a great diversity of holding, among the several
states of the union, on the question of whether frost bites or freezing comes
under the provisions of the statutes of the several states. The question has
not been passed upon in this state.

In the present case, the claimant loaded spokes onto a truck in a shed,
then pushed them to a car which stood in the open and unloaded them into the
car. In this cast there were other workmen assisting the plaintiff and
doing the same kind of work that he was doing and none of them were frozen.
If the claimant was exposed to weather of greater severity than the other
woskmen, the freezing may have been incidental to and in the course of his
employment; therefore he is entitled to compensation under compensation acts.

But as the employee was subjected to identical conditions, the judgment

will be reversed.

Stacey Brothers' Gas Construction Company v. Massey

175 N.E. 36s (1931)

Justice Curtis: The full Industrial Board, on the 7th of November,

-h0-

1930, made an award to appellee, Oral Massey, against appellant Stacey
Brothers' Gas Construction Company under the provisions of the Indiana
Workmen's Compensation Act, for injuries alleged to have been received

by the appellee while working for the appellant. The facts are: On June 3,
1930, appellee was in the employ of the appellant and on that day he received
second degree burns on his feet while placing hot rivets for the appellant

in a metal floor, upon which he stood, which was also exposed to the hot

rays of the sun. From the award made, the appellant appeals to this court
saying the award of the Industrial Board was contrary to law. The appellant
alleged the appellee's disability was not a.personal injury by accident.

The only question presented is whether or not the injury complained of
by the appellee and for which the award was made was caused "by accident
arising out of and in the course of employment” and within the meaning of
the Workmen's Compensation Act.

The evidence shows that the appellee was a boiler maker by trade, and
had been for 26 years, and that he was doing the work required of him by the
appellant, and was driving hot rivets into metal sheets exposed to the hot
sun and heated also by the rivets. He was standing upon these sheets and
about h:20 P. M. he noticed his feet stinging whereupon he descended from
the sheets and found his feet were blistered. He had done similar work
before without injury.

Was this a mishap or event not expected or designed? In our Opinion it
clearly was. It follows, therefore, that the injury complained of and for
which the award was made was caused by accident arising out of and in the
course of employment.

Award affirmed.

-h1_

Correia v. McCormick

15h Atl. 276 (1931)

Justice Rathbun: McCormick was engaged in building roads. Correia
was employed as laborer and also as an under boss. His duties were to
spread sand and gravel and to direct truck drivers where to dump their
loads. If the loads were dumped as directed, it was his duty to punch the
cards presented by the drivers. Correia's instructions were to send truck
drivers who failed to follow instructions to the boss and not to punch their
tickets. At the time of the injury Correia, while engaged in this work for
McCormick, became involved in an argument with a truck driver. The truck
driver having refused to follow instructions, Correia refused to punch his
ticket and directed the truck driver to go to the boss. While Correia.was
proceeding in the direction of the boss, the truck driver delivered a blow
with.his fist knocking Correia down and then struck him twice with a shovel.
One of the blows with the shovel so injured a nerve in Correia's left arm
as to paralyze several of his fingers. The truck driver was not a servant
of McCormick, but was an employee of a subcontractor.

The dirécf cause of Correia's injury was his strict adherence to duty.
He merely complied with the orders of his superior. There is no evidence
that at the time he received the injury he stepped aside from his employ-
ment to engage in a private quarrel. Had Correia punched the ticket giving
the truck driver credit for a load dumped in violation of orders, there
would have been no assault and no injury.

We find as a matter of law that the injury arose out of and in the
course of Correia's employment and was compensable.

Judgment for Correia.

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Industrial Commission of Ohio v. Hampton

176 v.11. 71:, 123 Ohio St. 500 (1931)

William Hampton was in charge of the material warehouse of his employer,
and was loading supplies onto a truck when the Sandusky cyclone struck. The
storm blew down the building and tipped sacks of cement on top Of him, caus-
ing his fatal injuries. After a denial of a claim for compensation the
widow brought the present appeal, alleging that the death was not due to an
act Of God and negligent storing Of company supplies.

Chief Justice Marshall: If the employment of Hampton had been in out
of door servide and he had braved the elements, but had been directly injured
or killed by the violent tornado by being picked up and thrown against a tree
or building, his situation would not be any different from others in the
community and his injury would not be due to any hazard of the employment.
The injury tO Hampton was not caused by the direct force of the wind upon
his person. His injury and death were caused by the collapse of the building
and the falling cg the materials upon him, thereby crushing out his life.
That the collapse of the building was caused by an act Of God does not pre-
clude a recovery but only brings the case within the range of the rule that
there may be compensation when the industry combines with the elements in
producing the injury. We are of the Opinion that the industry did nombine
with the elements in producing the hazard resulting in the injury.

Judgment for Hampton.

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Goslin-Birmingham Manufacturing Company v. Gantt

131 SO. 905 (1930)

Mr. G. R. Gantt received a bruise in his left side during the course
Of employment. This occurred on June 7, 1929, and he died Of spticaemia
or blood poisoning on the following August 5. Mrs. Gantt received a com-
pensation award for the death Of her husband under the Workmen's Compensation
Act, but the employer, Goslianirmingham Manufacturing Company, now appeals.

Justice Brown: We quote from Dr. Beddow: You may have these germs
floating around in the blood waiting for a chance to localize; yet I could
not say whether the man was already suffering from an infection and received
a bruise, or whether the infection followed the bruise, for I saw the man
after it all occurred. If a man was yellow and anemic and had the strep-
tococcus germ, a blow would be liable to stir the germ.

In either case therefore, the injury produced blood poison and thus
produced the workman's death.

Judgment affirmed.

McDonough v. National Hospital Association

29h P. 351; 13h Or. h51 (1930)

Patrick McDonough had his leg and foot injured while in his regular
employment with the Flora Logging Company and was treated by Dr. Sabin for
the National Hospital Association. In the present case, it is alleged that

Dr. Sabin set the leg, but neglected the foot to the asserted damage Of

-hh-

$50,000 to McDonough. From a decision for the defendant on this $50,000
claim, McDonough now appeals. The State Industrial Accident Commission
had previously awarded and McDonough accepted, $1,395.20 as payment under
the statute for the injury plus recovery for the negligent medical service.
Justice Band: The Legislature intended that the Workmen's Compensation
Act should be required to award compensation to an injured workman coming
within the terms Of the act, not only for the original injury, but also for
any subsequent injury he may sustain due to the malpractice or negligence
of the physician while being treated for the injury first sustained, but that,
once having received and accepted compensation for the combined injuries, he
cannot maintain an action against the physician for malpractice. If this
action could be maintained it would result in two recoveries for the same
damage.
Judgment affirmed.

Haynes Drilling Company v. Pratt
293 P. 1100; 1M6 Okla. 159 (1930)

Justice Clark: This is an original action filed in this court to
review a judgment and award of the State Industrial Commission, made and
entered on the 7th day of July, 1930, wherein the State Industrial Commission
awarded to the respondent, J. N. Pratt, compensation at the rate of $18 per
week for a period of one hundred weeks for the loss Of the right eye, less
$h00 previously paid as compensation, and also an award and order that

petitioners pay all medical expenses incurred by claimant as the result of

-h5-

said injury.

It is contended by the petitioners that prior to the accident, the
claimant had a cataract on the right eye that Obstructed vision. Therefore
claimant did not suffer a total loss Of vision, through the injury, and
therefore the injury is not within the meaning of the workman's compensation
law.

Dr. Todd testified that it was probable that the cataract could have
been removed without loss of injury. He has removed several with good
results.

We contend that the temporary loss Of vision of the eye would not pre-
vent the respondent from recovering for the loss Of an eye.

The judgment and award Of the Industrial Commission is affirmed.

Panther Creek Mines v. Industrial Commission

173 11.13. 818; 3112 111. 63 (1930)

Justice Farmer: The award was made by the Industrial Commission to the
claimant whereby he received compensation, according to law, for the loss Of
his left eye. As the claimant had previously lost the vision of his right
eye, he is permanently disabled. The employer therefore contends, he should
receive compensation from the certain funds set aside by the compensation
act for permanently disabled employees.

We are of the Opinion the award made complies with the provisions of

the statute, and the judgment of the circuit court will therefore be affirmed.

-h6-

Outboard Motor Company v. Industrial Commission

239 NM. 11+1 (1931)

An award was made by the Wisconsin Industrial Commission for the dis-
ability Of Arthur Ringer, an employee Of the Outboard Motor Company, based
upon inhaling silica dust as a grinder. The employee worked at his trade
for nine successive employers during the period 1909 to 1930, working for
the Outboard Motor Company from April 9, 1930, to June h, 1930. He actually
put in 260 working hours for this last employer, which is half time, being
sick the rest of the time. In fact, evidence showed that he was partially
disabled, off and on, during these twenty-six years which he worked as a
grinder. The company appeals from the award Of the commission.

Justice Fritz: In September, 1929, the applicant had tuberculosis
superimposed on pneumoconiosis. That combination did not disable him either
while employed at the Nash Motor Company from September to October, 1929,
or possibly even before that employment. At all events, that combination
disabled him from working at the Evinrude Company during the winter Of 1929
to 1930. He never recovered from that combination of tuberculosis and pneus
moconiosis. Before entering the employment of the Outboard Motor Company
in April, 1930, his condition. as the commission found, "had already approx-
imated total incapacity, intermittently and regardless Of his last employment
had reached a stage where a protracted period of total disability was imminent."
His breakdown while working for the Outboard Motor Company was not due to any
new outset of the disease but was merely a recurrence. Consequently, the
last employer, the Outboard Motor Company is not liable for compensation.

Judgment reversed, and caused remanded, with instructions to vacate the

award and to remand the record under section 102.23, to the Industrial Com-

-h7-

mission for futher hearings or proceedings.

GenevaPPearl Oil and Gas Comapny v. Hickman

296 P. 95“ (1931)

Theodore G. Hickman was a pumpman, employed by the GenevaPPearl Oil
and Gas Company and by the Rockland Oil and Gas Company. The two firms were
entirely independent, Hickman working part time for each, which together
constituted a full-time job for him. He was injured while working on the
Geneva preperty, and now seeks to have his compensation based on his full
wages. The Geneva Company, however, claims that the measure of his wages
should be merely $50 per month they paid him. The State Industrial Com-
mission Of Oklahoma made an award based upon his full wages from the two
companies and the companies appeal.

Justice Hefner: The first five paragraphs of section 7289 provide for
various methods of determining a fair "average annual earnings" or “average
weekly wages". It cannot be said Hickman's average wage as a pumper was
$50 per month, because that is not true. One company paid him $50 and
another $90 per month. His average wages therefore must necessarily mean
the average total amount he received from both companies.

The insurance carrier cannot complain because the law relating thereto
becomes a part Of his contract. Again, if the employee worked one-third of
his time for each of three employees, it is fair to them, because they each
take the risk for one-third of his time and no more.

The petition to annul ts denied.

Award Of commission is affirmed.

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Consolidated Lead and Zinc Company v. State Industrial Commission

295 P. 210 (1931)

William Hatfield, a pumpman in the employ of the Consolidated Lead and
Zinc Company, sprained a knee during his regular work and was paid partial
incapacity compensation for several months. He wore an iron brace, but that
was ineffective. The company sought to have him Operated upon, but he re-
fused. The company then stopped payments and petitioned the State Industrial
Commission to have the case closed, which was denied. whence this present
appeal, relying on the rule that refusal to undergo a simple, certain, and
reasonably safe Operation is such a.wilfu1 act of the injured as to prevent
further compensation.

Justice Cullison: In the McNamara v. Metropolitan Street Railroad
Company and th Henly v. Oklahoma Union Railroad Company cases the court of
Missouri said:

We do not think the plaintiff should be criticized and punished on ac-
count Of his failure to undergo a surgical operation. He should be accorded
the right to choose between suffering from the disease all his life or
taking the risk Ofan unsuccessful outcome of a serious surgical Operation.
Certainly, defendent, whose negligence produced the unfortunate condition.
is in no position to compel the plaintiff to risk his life again in order
that the damages may be lessened. To give heed to such contention would be
to carry to an absurd extreme the rule shich requires a person damaged by a
wrong of another to do all that reasonably may be done to minimize his damages.

Dr. De Arman, the only physician in this case to take the witness stand,
testified that it was highly probable that an Operation on claimant's knee

would eventually give claimant a 100 percent function of the use of said

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knee, yet the doctor would not go so far as to state that claimant would get

a 100 percent result without complications resulting from the Operation.
Under the state Of the record, we are of the opinion that the employer

has failed to show the Operation would be safe and simple and without risk.

The order and award of the State Industrial Commission is hereby affirmed.

Pacific Indemnity Company v.rindustrial Accident Commission

5 P. (2d) 1 (1931)

John Driscoll, a teamster, had his wooden leg smashed when his horses
got out Of control. He was engaged in his regular employment at the time
of the accident, and is protected under the usual clauses Of the California
Workman's Compensation Act. Since he had no money to purchase anew leg, he
was out of work from May 9 to October 1, when the state board awarded him
$383. MN for the time lost and $19.95 per week until the Public Indemnity
Company should purchase a new limb for him. The company brings the present
action against the commission to have the award annulled.

Justice Preston: It is plain the Workmen's Compensation Act was enacted
for the sole purpose Of compensating workmen for injury or disability incurred;
not for injury sustained by their personal prOperty. That a mania artificial
leg is his personal prOperty and not a part of his natural living body cannot
be disputed. If, under the present act, power were conceded to compenéate
workmen for injuries or loss Of prOperty , the jurisdiction of the commission
would be enlarged to an unwarranted extent. If an employee could recover for

injury to an artificial limb, what would prevent the extention of this right

-50.

to include other property injuries such as; eye glasses, false teeth,
crutches, tools or clothing, any of which might prevent the continuation
of employment, pending replacement.

The Workman's Compensation Act of this state does have a phrase as
follows "Including injuries to artificial members", but this is beyond the
power of the Legislature and thereby unconstitutional. (The unconstitution-
ality of this phrase does not affect the validity of the remaining portions
of this act.) The commission exceeded its judicial power as limited by
the constitution, and its award in favor of said respondent must be, and it

is, hereby annulled.

Chicago, Wilmington and Franklin Coal Company v. Indiana Commission

177 N.E. 731; 3M5 111. 78 (1931)

Chief Justice Stone: The parents of Raymond Hannebique, deceased,
were awarded compensation for partial dependency by reason of the death
of Raymond due to an accident arising out of and in the course of his em-
ployment with the Chicago, Wilmington and Franklin Coal Company. The
circuit court of Franklin county set aside the award and annulled the re-
cord of the Industrial Commission.

Raymond Hannebique was twenty—two years of age, unmarried and lived
with his parents and a younger brother. He gave his wages to his parents
and between his wages and that earned by his brother and a father in ill-
health they managed to get along. The total family earnings were about

$NOOO a year and they did not save anything from those earnings.

Due to the father being in ill-health and having his son working with
him which made it possible for the father to hold his job, the father and
mother were partially dependent on their deceased son.

Judgment of court reversed and award of Industrial Commission is con-

firmed.

Kennedy v. Keller
37 s.w. (2d) u52 (1931)

Chief Justice Sutton: The deceased has children of a tender age, but
the custody of the children were awarded to the mother by a divorce degree.-
The mother married again and her second husband completely supported her
and the children.

Because the deceased did not contribute to the support of his children
does not alleviate his legal responsibility for their support. If, after
having been abandoned by their father, they had been supported by some
charitable stranger or neighbor or some charitable institution or by the
state, would the courts hold that the children were therefore not dependent
upon their father for their support, and not entitled, upon his death, to
the death benefits provided by the statute? We cannot bring ourselves to
believe that the Legislature so intended.

Judgment for the children affirmed.

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Veith v. Patterson

3h 5.1-1. (2d) 717; 236 Ky. ans (1931)

William Patterson was killed while in the course of his employment with
John A. Veith. The daughter, Jennie May Patterson, was denied compensation
‘by the State Workmen‘s Compensation Board, and she took the case to the
circuit court, securing a judgment. The employer, John A. Veith, then
brought the present appeal on the grounds that William Patterson had no legal
duty to support his daughter, Jennie May, while she was confined to the re-
form school; and that therefore there were no grounds for compensation.

Justice Clay: At the time of the accident, Jennie May Patterson had
been confined in the reform school for more than six months and during
that period she had neither lived with, nor been supported by, her father, -
nor was she living with, or being supported by him at the time of the ac-
cident. In the circumstances she was not a dependent within the meaning of
the act.

There is no provision in the statute to meet a case like this, but we
can find support in those jurisdictions where actual dependency at the time
of the accident is a prerequisite to compensation. It is generally held
that claimants who are being cared for in the workhouse, reformatory, or
asylum are not dependent within the meaning of the Compensation Acts.

Judgment reversed and cause remanded.

Victory Sparkler and Specialty Company v. Gilbert
153 A. 275 (1931)

Mr. and Mrs. William James Gilbert adOpted a five year old boy, John
Fortner. The husband, William, died in 1922 leaving his wife, Mary Elizar
beth, claimant, and the adOpted son John. On May 31, 1929, John.was killed
in an accident arising out of his employment. He was twenty years old at
the time and supported his mother, Mary Elizabeth Gilbert. The State Indus-
trial Accident Commission of Maryland refused compensation, because of the
adOption feature, but the lower court reversed the decision of the commission
and the company brings the present appeal.

Justice Pattison: It will be seen that relations existing between an .
illegitimate child and its parent or between a stepchild and its step-parent
are vastly different from relations existing between an adopted child and its
adapting parents. In the case of the illegitimate child, there is no liability
of the putative father for the maintenance and support of the child, other
than the enforced liability arising from the bastardy laws of the state.

In the case of a stepchild, the step-parent has no liability at all. In the
case of the adopted child, the adapting parents assume the obligation to
maintain, support, and educate him to the same extent as if he were their own
offspring.

In the case before us, the adopting mother assumed the obligation to
support, maintain, and educate the adapted son and in return she is entitled
to his services to the same extent as a natural mother. She carried the
burden for years and after her means were greatly reduced, the adapted son
reached the age where his services meant much and it was then he contributed

to her support to the time of his death.

-5h.

We do not believe it was the intention of the Legislature to exclude an
adopting mother from compensation, and to include a natural mother where the
right did exist.

Judgment affirmed.

Bartling v. General Electric Company

2M7 NYS. 799; 231 App. Div. 369 (1931)

By the court. An award was made because of an injury to Henry Hous-
halter, which resulted in permanent loss of the use of 75 percent of his
right hand. The award was made to his widow for the reason that he died
prior to the making of any award from causes other than the injury. The
appellant made the payments to the widow as they became due, but she died
before all payments became due. Besides the widow, the deceased employee
left no dependents. After the death of the widow, the board made an award
to the executor and executrix of the estate of the widow for the amount of
the payments which had not accrued at the time of the death of the widow.

The sole point raised for the appellant is that the award to the estate
of the widow is unauthorized by any provision of the Workmen’s Compensation
Law and is invalid.

The law does provide that upon the death of the deceased from causes
other than the injury, the dependents are entitled to the compensation due
him. The law does not authorize that compensation due the deceased or his
dependent, should be part of the estate of the executor.

Award reversed, and claim of the estate dismissed, with costs against

the State Industrial Board.

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PrOper v. Polley Brothers

253 N.Y.S. 530 (1931)

The New York Industrial Board granted an award to the widow and
minor children of Lewis A. PrOper for accidental death while said Lewis was
working temporarily in New York. Polley Brothers appeal, alleging recovery
should not be in New York, but in Pennsylvania, if anywhere.

Justice Hindman: The claimant's deceased husband, Lewis A. PrOper,
was employed as a tool dresser by the Polley Brothers, a Pennsylvania
partnership engaged in the business of drilling oil wells. The business was
carried on chiefly in Pennsylvania, but they also did some drilling in
other states. The employees resided in Pennsylvania, and, when the employers
took a job out of state, they picked from these regular employees the men
most capable of doing the job, who afterward returned to their regular employ-
ment in Pennsylvania. The work of these employees out of state was purely
temporary as an incident of their general employment. They resided and were
hired in.Pennsylvania by a.Pennsylvanian employer.

That was the case of PrOper, the deceased employee. He had been working
for the Polley Brothers one year and working all that time in Pennsylvania
except for the nine or ten days that he worked in New York state just prior
to his death. His employers intended that he should return to his regular
occupation in Pennsylvania when the New York job was finished.

The Pennsylvania.Workmen's Compensation Act provides that the act shall
apply to “accidents occurring to Pennsylvania employees whose duties require
them to go temporarily beyond the territorial limits of the commonwealth, not
over 90 days, when such employees are performing services for employers whose

place of business is within the commonwealth."

-56.

The claimant is apparently entitled to compensation under the Penn-
sylvania Act. We think that the award should be reversed and the claim dis-
missed.

Award reversed, and claim dismissed.

Interstate Power Company v. Industrial Commission

23h N.W. 889 (Wisconsin) (1931)

Vernon Oehler, was a resident of Iowa and worked in that state for the
Interstate Power Company. The company was incorporated in Wisconsin, where
it had its main offices. Oehler was sent into Wisconsin to do a temporary I
job and while there was accidentally electrécuted. The Industrial Commission
of Wisconsin allowed compensation, and the power company appealed, alleging
it was an Iowa case since the employee was a resident of Iowa, hired in Iowa
and only temporarily in.Wisconsin.

Justice Wickhem: The workmen‘s compensation act as enacted in this
state does not state the status of the deceased. In the Blatz case it is
stated that the status is created when service is performed within the state
under a contract of hire, without regard to the question of“where the contract
was made. In the Wandersee case it is stated that until an employee performs
service for another in the state of Wisconsin, he is not an employee.

The Blatz case also stated when residents of the state of Wisconsin con-
tract for services to be performed out'of state, a constructive status under
the Wisconsin compensation act is created. We think the constructive status
simply means that, constructively, the services are being performed in.Wisconsin.

Affirmed.

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COIITPACTS

-53-

The idea of contractual obligation has not always existed in English
jurisprudence. The development of the doctrines underlying the subject of
contracts is interwoven with the history of procedure. Only recently has
historical research indicated the progress of the steps in thought from
the early law to the modern conception of contracts.

It is surprising that, in spite of the numerous foreign influences
which.were at work in the field of contract, the common law of England was
little influenced by them. The Church very early took a strong view of the
sanctity of contractual relationships, insisting that in conscience the ob-
ligation of a contract was completely independent of writings, forms and
ceremonies, and tried as far as she could to translate this moral theory
into terms of law. Then there was the mercantile courts which were endeav-_
oring to enforce the practice of the best merchants and to express that
practice in terms acceptable to either or both of the two conflicting
schools of legal experts whose approval was necessary. In.England both of
these forces were at work. Glanville, one of their experts of the times,
knew just enough of the Roman classification of contracts to be able to
describe, and then misapply, it, while Brocton endeavored to express common
law in Romanesque language. This is why the English law of contract is
neither Roman nor canonic.

In the final analysis the common law courts developed a law of con-
tracts as best they could out of the stubborn materials of the forms of
action, and so, after many years of uncertainty and long conflicts with
technical and procedural difficulties which by this time were inherent in
the common law system, they finally arrived at a systematic law of contract.

The common law of the United States has as its bases the common law

of England in its form as it existed at the time of the revolution, and has

-59..

developed it along the lines which seemed most in accord with justice and
reason.

A contract is an agreement between two parties, resulting in an ob-
ligation or legal tie, by reason of which one party is entitled to have
certain stipulated acts performed or forborne by the other.

A contract is also said to be an agreement enforceable at law, made
between two or more persons, by which rights are acquired by one or more to
acts or forbearances on the part of the other or others. According to the
etymology of the word, from contraho, a contract is a drawing together of
the minds of the parties until they meet in agreement.

There are two sorts of agreements or obligations, the delictual and the
contractual. A delictual obligation arises from the violation of a pre-
existing right. It does not depend for its creation upon any desire of or '
attempt by the parties concerned to create it, but it arises by virtue of
one's place as an individual of society. Thus, A owes B a duty not to
assault him. B enjoys this right from which a new right may arise if the
first is violated. This new right will entitle him to damages. The right
of B is said to be a right in rem, that is, against the world at large.
Such rights are to be found in the law of torts.

As students of engineering law we are primarily interested in contractual
obligations. A contractual obligation arises between the parties by means
of their acts. They do not depend on any rights that the parties have had.
Thus, when A and B enter into a contract, new rights and duties are created
by A and B which did not previously exist. This right is one in personam,
that is, against determinate persons.

There are four things necessary to make a contract.

1. The offer and acceptance, called the agreement. This offer and ac-

-6o-

ceptance is the assent given by each party to the other with reference to the
subject matter. The parties must be of the same mind and intention concerning
the matter agreed upon.

2. The form or the consideration. The form is that which the law re-
quires to give the agreement legal recognition. For if a deed is'not under
seal, the courts will not enforce it. If a contract is not under seal, it
must have a consideration. A consideration means a forbearance, or a detri-
ment, or a giving up of something one is not bound to relinguish. Thus, to
make a promise one is not bound to make is a consideration for another pro-
mise. Furthermore to enforce a promise, it may be compulsory to have it in
writing.

3. The parties must consist of two or more persons, for no one can
make a contract with himself.

h. The subject matter of the contract or agreement must be possible
to perform and it must be within the statutory restrictions of the state.

It may be as varied as the necessities of human life.

Suppose A promises to enter B's service for one year, and B promises
to pay A $1000 for his work. The agreement consists of the meeting of the
minds of A and B as to the terms of the contract. The consideration consists
of the services to be rendered.

There are three classifications of contracts with respect to form.

1. Formal contracts. These obligations are dependent for their valid-
ity upon their form, and may be divided into contracts of record and contracts
of seal. An example of a contract of record is a judgment of a court or a
recognizance. These are not true contracts, however, for the obligations

are imposed by law, and not by the agreement of the parties.

A contract under seal, also called a specialty, is a.written promise or

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obligation which derives its validity, at common law, from its form alone,
the presence of the seal.

Thus where A executes an instrument by which he agrees to work for B
for a year, and the work "Seal“ appears after his signature, the contract
is a specialty.

2. Quasi-formal. Quasi-formal contracts are those which are partly
dependent on form and partly on consideration. They are more commonly in-
cluded under the term simple contracts. An example is a bill of exchange.

3. Simple contracts. All other contracts are simple contracts, whether
they be oral or in writing. Other terms applied to this class are informal
contracts, and verbal contracts.

Thus where A orally agrees to sell B his horse for $100, the contract '
is simple. Similarly, if he agrees in writing to sell the horse, it is a
simple contract, provided there is no seal.

Contracts are further divided into two classes depending upon how fully
the terms of the contract are stated.

1. Express contracts. Express contracts are contracts whereby the
terms and the promises are fully known to each of the parties. Where A
agrees to sell B a horse for $100, and B agrees to buy the horse for that
sum, the terms of the contract are fully expressed.

2. Implied contract. An implied contract arises where the parties have
not so fully stated the terms, but have actually made a contract. In such
cases the terms of the contract are determined by the conduct of the parties
and the inferences prOperly deducible from the attending circumstances. In
short, the parties are actually contracting but not expressly and fully.
This idea is important because it distinguishes such implied contracts from

another class, sometimes called implied contracts, but in modern jurisprudence

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termed a quasi-contract.

If A works for B, under such circumstances that no reasonable man would
conclude that A meant to work; without compensation, B is liable to A for
the fair value of such services. Although nothing was mentioned as to the
amount of the salary, from B's conduct it is implied that as a matter of
fact he expected to pay A. This is an example implied in fact. There is a
contract, but its express terms are incomplete and other terms must be implied
from the fact that B employed A.

If A.in making change, by mistake gives B ten dollars instead of five
dollars, it is clearly unjust that B retain the extra five dollars. There
is, however, no contract between A and B, either express or implied, for the
return of the money. Neither from the circumstances nor in any other way
can any sort of contract be found. But the law steps in and imposes an ob-
ligation on B to return the money, for he is unjustly enriched at the ex-
panes of A. This doctrine of unjust enrichment is the fundamental basis of
the subject of quasi—contracts, and illustrates the difference between a con-
tract implied in fact.

A general distinction between express and implied contracts is in the
mode of proff. An express contract is proved by the evidence of the words
'used or writing executed. In implied contracts the intention of the parties
is determined by proving the facts and circumstances, surrounding them.

But when a contract is established in either of these ways, it is of the

same effect and validity, and the consequences of a breach of the contract

are the same. There can be no implied contract where there is an express con-
tract between the parties in reference to the same subject matter, and where
the provisions of the express contract would supersede those of the other.

In either an express or implied contract, a contract can either be

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'bilateral and unilateral. A bilateral contract is one where there are re-
ciprocal promises, so that there is something to be done or forborne on both
sides. Such a contract consists of mutual executory promises. Thus where
.A promises to sell B his horse for $100, and B promises to purchase the horse
for that figure, there is a bilateral contract.

A unilateral contract is one in which there is a promise on one side
only. Thus where the consideration is executed on one side and executory
on the other, the contract is unilateral. B promises to pay A a dollar if
he will deliver a package to B. There is no obligation upon A to deliver
the package but if A delivers the package to B, he obtains the promise of B
to pay the dollar. The contract is executed as to A and executory as to B.

Examples of unilateral contracts are promissory notes.

R. F. Conway v. City of Chicago

271+ 111. 369; 113 31.3. 703 (1916)

R. F. Conway Company had a contract for paving Lincoln Avenue for the
City of Chicago. The specification required the street railway company
would pave the center 16 feet and the Conway contract would complete the job.
The paving consisted of a six inch concrete base with a one inch sand filler
on tOp. Treated wood blocks were to rest on tOp of the filler. There was
a guarantee clause in the contract which stated that the City of Chicago
would retain five percent of the total contract price, to insure repairs
found necessary in the five year period. The pavement settled. The Conway

Company declared that the City of Chicago could not use the five percent re-

-6h-

tention fund to repair the street, because the failure was caused by heavy
streetcars traveling on light tracks causing excessive vibrations and this
was a contingency not included in the contract obligation. The City of
Chicago claimed Conway was liable irrespective of the cause of failure. From
a judgment to the City of Chicago, Conway appeals.

Justice Dunn: It would be justifiable that the appellant should stand
the loss of the five percent retention fund, if the appellant's work could
be shown or proven to cause the failure. The mere mention of “proper con-
struction of said improvement" would hardly seem to guarantee to cover the
sufficiency of plans and specifications over which the contract had no con-
trol. We are of the Opinion that to fairly construe or interpret the con-
tract, the contractor did not guarantee against all defects arising during .
the five years but only defects arising on account of the character and
quality of the materials and workmanship.

Judgment reversed.

Sloss-Sheffield Steel and Iron Company v. Payne

186 Ala. 3111; 611 s. 617 (1911;)

J. D. Payne contracted with the Sloss-Sheffield Steel and Iron Company
that he "should go upon the land of the steel company and open what is com-
monly known as the Ida ore and Big Seam ore, and quarry therefrom and furnish
to the steel company all of the outcrOp of said Ida ore and six feet of Big
Seam ore thereof, at a rate of from one to ten cars a day, for which the

steel company guaranteed to pay Payne §0 cents a ton, for said ore". The

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steel company ordered Payne to stOp after four months work. Payne sought
damages for a breach of contract, and from a judgment for Payne the steel
company now appeals.

Justice Mclellan: After consulting various authorities for the defini-
tion of the term ”outcrOp”, we have come to the conclusion that although
it has distinct meaning in mining law, its service to define contractual
rights and obligation is negligible. It is too indefinite.

The subject matter of a contract is an essential element. A valid
contract must describe the subject thereof with definiteness and certainty.
Itcannot leave the designation of the subject matter at large and yet bind
the parties. The term outcrop being uncertain, indefinite as charged, the
entirely dependent terms could add nothing to the certainty prerequisite.

The fact that under said contract the plaintiff delivered and was
paid for many tons of the ore cannot avail to avert the uncertainty of the
contract in respect to the term outcrOp. The acceptance by the defendent
of ore extracted from the outcr0p manifestly did not import into the un—
certain term "outcrop", of the contract, the degree of certainty essential
to make it valid and binding.

Reversed and remanded.

Salisbury v. Credit Service

199 A. 67h (Delaware) (1937)

Credit Service, Inc. was a loan association which loaned out small sums

to people in Baltimore. It also received investments, through issue of gold

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debenture bonds. A circular which the company issued promised that the com-
pany would maintain a market at par for those bonds which were held for a
year. M.C. Salisbury purchased such a bond, held it for a year, and then
tried unsuccessfully, to sell it back to the company at par less two per-
cent brokerage fee. Salisbury brings action on the grounds that the cir-
cular was an offer to maintain the market price of the bond for repurchase,
if the reader would buy a bond. It was an offer and it was accepted, there-
fore it is a contract.

Justice Harrington: It is elementary law that in order to constitute
a contract there must be an offer made by one person to another and an ac-
ceptance of that offer by the person to whom it was made. Whether in writing
or otherwise, a mere statement of a person‘s willingness to enter into nego-
tiations with another person is in no sense an offer, and cannot be accepted
so as to form a binding contract.

In this case, it cannot be denied that the circular was issued by the
defendant company to its selling agents to aid them in the sale of the bonds.
The language of the customer market clause, if in any sense promissory in its
nature, was, therefore, a part of the contract of sale. As the plaintiffs
acted upon this guarantee the defendant is bound by them.

Judgment for the plaintiff, Salisbury.

Toledo Computing Scales Company v. Stephens Brothers

96 Ark. 606; 132 5.1-1. 926 (1910)

Stephens signed an order for a set of scales and mailed the order on

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?December 9 to the Toledo Computing Scales Company at Toledo, Ohio. That
night he telegraphed Toledo countermanding the order, and followed the wire
‘with a similar letter. The company said that they accepted the order on DC!
camber l5 and the company's order clerk testified that he did not receive
the cancellation until December 16. The company proceeded to fill the order
anyhow, and sent the scales to Sulphur Springs, Arkansas, where they were
accidentally destroyed in a railroad fire. The shipment was f. o. b. Toledo.
If the negotiations amounted to a contract, it could not be revoked and
Stephens Would have to pay Toledo, and then possibly get some redress from
the railroad. 0n the other hand, if the order by Stephens is merely an
offer to purchase, it could be revoked any time before acceptance, and To-
ledo shOuld seek its loss from the railroad. From the judgment for Stephens
Toledo appeals.

Justice Hart: The order in question shows on its face that it was merely
a proposal to purchase, and that it was not a contract of purchase or sale.
It is so treated by the head of the appellant's order department, for through-
out his testimony he speaks of it as an order, and specifically names the
date of its acceptance. With these statements in mind it cannot be denied
that Stephens had the right to revoke his order anytime before acceptance.

The head of the appellant's order department claims he received the
telegram of revocation the day after the acceptance. He denies receiving
a letter countermanding the order. The appellee also claims they telephoned
the agent to countermand the order.

The head of the appellant's order department fails to mention he was
the only one of the appellant's employees who received communications ad-
dressed to it. In view of these facts and his interest in the result, it
cannot be said the findings of the lower court were arbitrary.

The judgment will therefore be affirmed.

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Haskell and Barker Car Company v. Allegheny Forging Company

147 Ind. A. 392; 91 11.3. 975 (1910)

Haskell and Barker Car Company ordered 35 winding chains from the Al-
legheny Forging Company in accordance with the correspondence between the
two companies. Only a part of the chains were delivered. The Allegheny
company then sought collection of the unpaid bill, and the Haskell company
replied that the default on the full delivery was a breach of contract with
resulting damages. Haskell put in a counterclaim for the amount of the
damages due to delay in time and higher cost in completion of the purchase
in the open market. 'The legal controversy is whether there was a contract
through a proper offer and acceptance of an order for 36 chains or whether
there was not a contract for any amount, but with the Allegheny company
at liberty to collect merely for the reasonable value of whatever chains
were delivered. From a judgment for Allegheny, Haskell now appeals, alleging
a full contract as a support for his counterclaim for damages.

Justice Watson: The counterclaim charges the acceptance of the order
by the appellee and that only a portion of the chains ordered were forwarded
to the appellant, and that by reason of the failure of the appellee to
comply with its part of the contract, the defendant was compelled to go into
the open market and purchase the chains which the appellee failed to deliver,
and had to pay the sum of $8M in excess to the amount the appellee had agreed
to furnish them. There was also a $100 claim for the delay in securing these
additional chains. .

The shipping of a portion of the chains by the appellee undoubtedly in-
dicates the offer was accepted and therefore the contract was completed and
binding.

Judgment reversed, with leave to both parties to amend the pleadings if

they so desire.

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United States v. P. J. Carlin Construction Company

22h Fed. 859: 13s C.C.A. hug (1915)

The United States advertised for bids for certain construction work
at Fort Madison, San Francisco, California. The Carlin Construction Com-
pany submitted two preposals. Bid "A" was a lump sum bid of $1,178,000
while bid “B” was an alternate proposal of doing the work on a plan devised
by Carlin. The United States considered the low bids of Carlin, reserving
to itself the right to determine whether the work should be on the basis
of plan "A" or plan "B". Considerable negotiations followed as to the de-
tails of the prOposed plan “B“, Carlin meanwhile being somewhat slow in
completing these plans. Sixty days after Opening of bids, the government
accepted plan "A", and the Construction company refused to sign the contract.
The United States then instituted an action for resulting damages, and from
an adverse Judgment brought the present appeal.

Justice Rogers: It is necessary, therefore, to determine whether the
government duly accepted the offer submitted by the construction company.
If the offer was never prOperly accepted, the government cannot maintain
this action.

At the time the government invited bids it provided the bidder should
do either of two things, put up $10,000 in cash or give a bond by a re-
sponsible surety company that the bidder would execute the contract. The
construction company elected to give a bond. That bond executed by the
Illinois Surety Company guaranteed that if the Construction Company's bid
was accepted "within 60 days from the date of the opening of the proposals"
the Construction Company would within 10 days after notice of acceptance
enter into contract. This bond the government accepted, but after the bids

were received the government notified the Construction Company that they

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could have a period of six months to determine whether the work would be
done according to plan "A" or "3". Therefore there was not a true accept-
ance to the offer.

Judgment affirmed.

Glenn v. S. Birch and Sons Construction Company

52 Mont. Min; 158 P. s3u (1916)

The S. Birch and Sons Construction Company paved certain streets in
Great Falls, Montana, and received $200,000 in Great Falls six percent paving
bonds. The company next desired to market these bonds and recover its money
out of the job. Considerable correspondence was had with Fred Glenn and Com-
pany brokers in municipal bonds. There are three important wires in these

negotiations.

October 8, 1913

Fred Glenn:
We will hold Great Falls' warrants for your acceptance until October
eleventh. After that date will hold them subject to other parties.

5. Birch and Sons

October 8, 1913

S. Birch and Sons:

Our people have confirmed purchase of both districts of Great Falls,
Montana, paving warrants, subject legality, and etc. We are sending written
contract which you will please sign. Concerning proceedings please obtain
minutes every council action from start to finish. We are writing you
fully. Please wire undersigned immediately confirming sale.

Fred Glenn

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October 8, 1913

Fred Glenn:
We confirm dale of warrants subject to written contracts.

5. Birch and Sons

The written contract on arrival from Glenn had substituted "German
American Trust Company" as a purchaser in place of Glenn. This was un-
satisfactory to Birch, the whole deal was called off, and Birch sold the
bonds elsewhere.

Glenn now sues Birch on a breach of contract, and Birch replies there
never was a contract, since there was at no time an unconditional acceptance
by either party of the counteroffer of the other party.

Chief Justice Brantly: In order to form a contract there must be an
offer by one party and an unconditional acceptance of it by the other, in
accordance with its terms.

There was an offer and it would have been accepted if the plaintiff
had not introduced the third party. The offer was made to the Glenn Com-
pany and not to the German American Trust Company. There is no doubt that
there was not a valid offer and acceptance. There was no contract.

The judgment is affirmed.

Wisconsin Steel Company v. Maryland Steel Company

203 Fed. he}; 121 0.0.1. 507 (1913)

The Maryland Steel Company brought a legal action for work done in the

construction of a high-pressure engine for the Wisconsin Steel Company. There

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had been some informal conversations between the parties, but the words
could not be construed as censtituting a binding contract, since there

was not actual authority from prOper company officials, nor were the terms
of the contract sufficiently definite or certain. But it developed that

as a result of their conversations the Wisconsin Company sent castings to
the Maryland Company. The controversy then turns on the legal significance
of the apparent act of sending the castings to the Maryland Company and that
company working on the castings. From a judgment for the Maryland, the
Wisconsin appeals.

Justice Baker: The Wisconsin Company was having two engines built by
the Maryland Company and as a representative of each company was looking over
the work being done on the engines in the Maryland plant, the representative
of the Wisconsin company said he would send a third engine to be built.

The representative of the Maryland Company said to do so.

As neither of these men had the authority to make a binding contract,
there is no contract on that account. Although we do believe there is a
contract due to the acts of the companies. The sending of the castings to
the Maryland Company by the Wisconsin Company was an offer. The working
on the castings by the Maryland Company was an acceptance.

Judgment affirmed.

Wheeler v. New Brunswick and C. Railroad Company

115 U.S. 29; 5 s. Ct. 1160; 29 L. Ed. 3M1 (1885)

0

James Murchie, vice president of the New Brunswick and 0. Railroad Com-

-7)-

pany, agreed to sell to E. S. Wheeler between 200 and 600 tons of second-
hand rail at $30 per ton. Although it was not necessary, Murchie then re-
ferred the matter to his board of directors, who approved the sale but in-
cluded a specification that a ton should be considered 2000 pounds. Murchie
sent the minutes of the meeting of the board to Wheeler. Wheeler promptly
replied that he considered that the contract was in full force and effect,
and that the ton should be treated as 2,2RO pounds as that was the custom
of the trade in scrap iron. Several months passed before delivery date,

but no further correspondence was had. Meanwhile the market price of $30
per ton dropped, and when the railroad attempted delivery, Wheeler refused;
alleging in effect that there was no agreement on the number of pounds per
ton and therefore there was no contract. From a judgment in the lower court
in favor of the railroad, Wheeler now appeals.

Justice Miller: The originélagreement is a valid contract because both
Murchie and Wheeler had full authority to engage in such acts. The court
also finds that each party at the time of the making of the contract under-
stood that the word "tons" meant tons of 22h0 pounds and there was no mis-
understanding between said persons as to the true intent and meaning of the
contract.

The contract was not annulled because of the minor disagreement which
seemed to exist between the parties as to whether a net or gross ton was to
be the unit of measurement. To nullify or set aside this contract, fairly
made, requires the consent of both parties. There must be the same meeting
of minds, the same agreement to modify or abandon it, as was necessary to
make it. Wheeler and company are bound to accept and pay for the rails when
tendered, unless they have some other good reason for not doing so.

Judgment affirmed.

-7h.

W, G. Root Construction Company v. West Jersey and Seashore Railroad Company

85 N.J.L. 6115; 90 A. 271 (19114)

Justice Trenchard: The plaintiff, a construction company, contracted
with Atlantic City to build a sewer in certain streets. The contract pro-
vided that the construction company should, at its own expense, take care
of and support railroad tracks and other structures in the streets. The
performance of the work required that the sewer be built and extended under
the tracks of the West Jersey and Seashore Railroad Company. This made nec-
iessary caring for and safe guarding the tracks and interlocking signal system
of the railroad. In order to expedite the work, the construction company
said to the railroad company in effect: We want to get under your tracks
without delay in order to carry out promptly our contract with the city,
and so will you, without delay, and at our expense, do the work of caring
for the tracks. etc, which we contracted with the city to do at our expense.

The railroad company did the work promptly and rendered bills eafih month.
The bills were paid with the exception of about $1300, and the construction
company refused to pay this because there was no consideration for its contract
to pay the railroad company for its work in caring for and safeguarding the
railroad tracks and signal system. It was argued that railroad company was
required by law to do this work, and hence the contract with the construction
company was void for want bf a consideration.

We believe there was sufficient consideration in the agreement for the
work done by the railroad, since it was enabling the construction company to
complete its contract with the city without delay and litigation which would
surely have resulted if an attempt would have been made to compel the rail-

road company to do the work at its expense.

-7h.

Our conclusion, therefore, is that the judgment in favor of the railroad
company was right. It was not Only legal, but it is equitable, because pre-
sumably, thecnnstruction company ahs received from Atlantic City money for
which it had not performed any service.

Judgment affirmed,

Baumhoff v. Oklahoma City Electric and Gas and Power Company

1M Okl. 127; 77 P. ho (190a)

The Oklahoma City Electric Company agreed to sell and George W. Baum-
hoff agreed to buy the utility in Oklahoma for $120,000. There was a condi-.
tion that the city council should pass an ordinance, in effect changing the
party in the franchise to conform to the sale. The ordinance was passed, but
the Oklahoma City Electric Company refused to perform. From a decision in
favor or the company, Baumhoff appealed.

Justice Gillette: The contention of the Oklahoma City Electric Com-
'pany that the contract sued on is void for want of mutuality, cannot, we
think, be sustained upon the authorities.

There may be said to be mutuality of contract where the agreement entered
into between the parties is binding alike upon each touching its ultimate per-
formance. Both parties are bound or neither is bound. In the contract under
consideration the item to be sold is plainly stated. The amount to be paid
is equally definite. The time in which conveyance was to be made was also
fixed. .It is true that the contract provided for the sale to take place after
the passage of an ordinance; butthiscnndition in the contract does not, we

think, render the contract void for the want of mutuality.

 

The provision in question, if not ultimately consummated, may defeat
the sale provided in the contract; but it cannot be said that it is lacking
in mutuality because it is manifest that both parties are mutually and equally
affected by and concerned in this condition.

Judgment reversed,

Perry v. Pearson

135 Ill. 218; 25 n.3, 636 (1390)

Silas Q. Perry made a contract on November 2h, 1883, for the sale of some
$357,700 worth of stock in the PerrybPearson Company, manufacturers of wood‘
products. Six years later he brought the present action, alleging that in
lSSM he was mentally incompetent and that the contract should be recinded.
From an adverse judgment in the lower court, Perry now appeals.

Justice Macruder: It is said that Perry was incapable of making a sale
of stock, by reason of the impairment of his mental faculties through illness
and trouble. It is urged that the weakness of his mind at the time of sale
made him an easy victim of imposition. Mental weakness which will justify
a court of equity in setting aside a contract or a deed must be such as
renders a party incapable of understanding and protecting his own interests.

The complaintant produced a large number of witnesses who testified
as to his mental condition in the fall of lSSM. They spoke of his being
nervous, worried and excited. A few witnesses said he appeared to be broken
down, worn out, and shattered in health, Several refered that his voice

trembled, and there was sometimes a wild, dazed look in his eyes. At the time

-76.

the PerrybPearson Company was largely in debt. Many of its obligations
were about to mature.

The defendant produced a large number of witnesses, many of whom had
known the complainant for years, who said he was a diffident and reticent
man; that he had always had a sort of nervous hesitancy in his speech and
a.tremmlousness in his voice, and a shaking Of the hands. It was also proved
that the plaintiff had performed many perfectly intelligent contracts at
that time, even though he did appear to be nervoud and worried.

We are satisfied that the plaintiff was capable at that time of trans-
acting ordinary business and that he was only over taxed by his financial

condition.

There is no mental incapacity. Judgment affirmed.

Hardy v. Worchomoka

(N.W, Terr.) 3 West L.R. 579 (1906)

Justice Newlands: The section of the steam boilers' ordinance referred
to is as follows: -

Anyone not holding a final or provisional certificate of qualification
as an engineer or a permit under this ordinance who at any time Operates
any steam boiler or is in charge of any steam boiler while in Operation,
whether as owner or as engineer, shall be liable on summary conviction to
a penalty of not less than $5 and not more than $50.

Before a certificate of qualification as an engineer can be obtained,

the candidate must pass an examination as to his fitness to take charge of

a steam boiler and produce a certificate of good conductand sobriety.

These provisions show that the intention of the ordinance is to allow only
those persons who have the necessary qualifications to Operate a steam
boiler and to prohibit all others from doing so. The plaintiff was there-
fore prohibited from Operating a steam boiler during the time he had no
certificate and cannot recover wages for the work done by him in that capac-
ity during that time.

The plaintiff will have judgment for costs on the lower scale.

Short v. Bullioaneck and Champion Mining Company

20 Utah.20; 57 P. 750; M5 L.R.A. 603 (1899)

It was illegal to employ a workman in excess of eight hours per day,
except in case of emergency. 3. L. Short was instructed to work twelve hours
a day during a period of four months, and now brings an action for $1M8.15
as wages for this overtime. From judgment in favor of his employer, Bullion—
Beck Mining Company, Short now appeals.

Justice Miner: It appears to us that the consideration for the services
rendered was illegal. In 6 Am. and Eng. Enc. Law (2d Ed.) p. 757, it is
stated:

A contract founded upon a consideration.which is illegal in whole or'
part is as between parties and their privies, void and of no effect, and a
court of law or equity will not entertain a suit brought in relation to it,
but will leave the parties as it finds them. If the agreement be executed

the court will not rescind it. If it is executory, the court will not aid

its execution.

In the case of Wood v. Armstrong, 25 Am. Rep. 671, the court said:
"It would be a strange anomaly if a contract made in violation of a statute
and prohibited by a penalty, could be enforced in a court of the same country,
whose laws are thus trampled upon and set at defiance."

We are of the opinion that as both parties are engaged in criminal
enterprise, both are principals, and both guilty, and the plaintiff is not
entitled to recover.

Judgment of the court is affirmed.

Reece Folding Machine Company v. Fenwick

1ho Fed. 287; 72 C.C.A. 39; 2 L.R.A.N.S. 109M (1905)

A. D. Fenwick was a successful inventor who had been in the employ of
the Reece Folding Machine Company. He was discharged without cause in the
spring of 1899. He had specialized in the invention of machinery for folding
collars and cuffs, and had made a contract with the company that he would
assign to it any of his past, present or future inventions in this narrow
field of collar and cuff folding. The company brought an action to force
Fenwick to assign an invention which he had previously completed, and also
any he had invented since his discharge, as per contract. Fenwick replied
that the contract was illegal and void, because it restricted his personal
liberty. From a judgment for Fenwick, the Reece Folding Machine Company

now appeals.

-79..

Justice Putnam: The defense is set up that such contracts for an in-
definite period, covering inventions to be afterwards made, are against
public policy. On the other hand, whether based on agreements for employs
ment or on other valuable considerations such contracts have been extensively
made. They are essential to the business of the contracting parties, and are
not unjust. A person may purchase an invention, and pay therefor a very
large sum, and proceed to use it. The inventor, according to practice not
uncommon, may subsequently overlap that invention by improvements which,
though small, may be enough, in these days of sharp competition, to build
up a successful hostile business.

On being discharged Fenwick considered his relations with the complain-
ant company terminated. Thereupon he Opened a place of business and began
inventing on his own behalf. Six months after he was discharged, Fenwick
visited the principal Office of the complainant corporation, and told the
Officers he had begun building a new folding and pasting machine. (The.
folding machine was of the type specifically related in his contract.) He
wanted to enter an arrangement whereby they could exploit these machines.

They refused his offer. This refusal further substantiated Fenwick's
belief that he was on his own behalf.

We also believe that conversation completely severed the relation bd-
tween the two parties. An invention, prior to this time, which is specifically
within the contract, can be exploited by the complainant, that is if Fenwick
has not spent his time, efforts or money in developing and exploiting the same
to any substantial extent.

Reversed and remanded for proceedings not inconsistent with this Opinion.

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Anchor Electric Company v. Hawkes

171 Mass. 101; 50 n.3, 509; 63 Am. 5.3. MO}; kl L.R.A. 189 (1898)

The Anchor Electric Company was formed by a merger of several persons
and corporations engaged in the electrical business. Part of the contract

signed by 3.0. Hawkes and others provided that for five years they would not

individually compete in the electrical business with the Anchor Electric
Company. The company brought an action in a lower court to injoin Hawkes
from competing against the Anchor Company. Hawkes claimed the contract was
illegal because it was a restraint of trade. From the decision for the
plaintiff, Hawkes appeals.

Justice Knowlton: From very early times certain contracts in restraint
of trade have been held void as against public policy. They are objection-
able on two grounds: They tend to deprive the party restrained of the means
of earning a livelihood, and they deprive the community of the benefit of his
free and unrestricted efforts in a chosen field of activity.

The Objection to an agreement which restrains trade has evolved to
where such an agreement if reasonable is held valid. Many decisions in both
England and the United States verify this.

In this case, inasmuch as the stipulation is only to refrain Hawkes for
five years from doing business that would interfere with or compete with the
prOposed business of the Anchor Electric Company, it seems quite clear, under
the authorities of Massachusetts, that the stipulation gives no further limit—
ations than is reasonably necessary to protect the good will of the business
sold by the defendant's corporation, and it should, therefore, be held valid,
unless there is a distinction in the company between the two parties. Very

likely the price paid by the plaintiff was larger because the good will was

-31-

deemed more valuable due to this restriction.

Judgment affirmed.

Winchester Electric Light Company v. Veal

lu5 Ind. 506; Ml N.E. 33h (1895)

George W. Veal, as a county treasurer, loaned certain county money
to the Winchester Electric Light Company, receiving in return two mortgage
notes. This procedure was illegal. Veal, as an individual, brought an
action to recover on the notes. For a decision in favor of the defendant-
on the grounds that the contract of the mortgage was illegal, Veal appeals.

Chief Justice Howard: We contend as many other authorities in this
and in other courts thatin cases such as this before us, public policy re-
quires that, notwithstanding the violation of the statute, the contract
based.up0n this violation should nevertheless not be declared void. In the
case of Lester v. Bank, the president of the bank had borrowed from its
funds which is contrary to statute. Recovery under the contract was enforced,
not to shield the Officials who had violated the law, but for the protection
of the stockholders, depositors, and other creditors of the bank. The faults
or even crimes, of public officials, ought not to be allowed to interfere
with the right of the peOple, through their several municipal and political
organizations, to recover the moneys raised from them by taxation, and wrong-
fully converted or misapplied by such officials.

The judgment is reversed. (New trial granted, and privilege Of Veal
to have the county joined in the lawsuit with an issue of public policy and

thus permit recovery on the notes.)

.32.

Rabinowitz v. Massachusetts Bonding and Insurance Company

197 A. an; 119 N.J. Law 552 (1938)

B. HcCormack was injured and taken to a hospital. The patient was con-
fined in the hospital for nine months with an injured knee. The accident oc-
curred within the Workmen's Compensation legislation, the Massachusetts Bond
and Insurance Company being the insurer. Two months after admission the
hospital wrote the insurance company regarding payments. and the reply acknow-
ledged responsibility under certain conditions. The bill was never paid,
however, and the plaintiff now seeks recovery on the basis of a quasi-contract
for the value of the benefit conferred. It is conceded that there was no
expressed contract between the hospital and the insurance company. The hos-
pital has assigned its rights to the bill to Rabinowitz.

Justice Wells: It is a well established rule of law when a person,
with the expectation of remuneration, confers benefits of service or property
upon another, under such circumstances that it would be unjust and inequit-
able for the persons receiving the benefits to retain them without compen-
sation herefor, the law will raise a quasi-contractual obligation to support
a recovery for the value of such benefits conferred.

It can also be said that a company which is under a legal duty to provide
the person with medical or surgical attendance, the physician is in the posi-
tion of one who dutifully intervenes in the company's affairs and performs
its obligation. But if the company owes no such duty to the person injured,
there is no satisfactory basis upon which it can be held responsible to the
physician.

In this case the insurance company clearly indicated a responsibility,

through its policy, to pay for proper medical services rendered to the employee.

-33-

Furthermore, the letters indicated a recognition of the services being render-
ed by the hospital and an authorization to continue the same until recovery
was effected. The hospital "dutifully intervened in" the affairs of the in-
surance company and conferred a benefit for which it is entitled to a reason-

able remuneration.

Pacific Timber Company v. Iowa Windmill and Pump Company

135 Iowa 308; 112 1:34. 771 (1907)

The Iowa Windmill and Pump Company purchased a carload of lumber from
the Pacific Timber Company, the lumber being in specified size and at speci-
fied prices for the respective sizes. The consignee accepted part of the
lumber, rejecting the balance as below standard quality. It is admitted that
if this contract is a "severable" one, the consignee could accept part and
reject part. On the other hand, if the contract is an "entire” contract, ac-
ceptance of part constitutes acceptance of the entire.

The Pacific Timber Company brought an action for one full car of lumber,
and the Iowa Company replies that the acceptance of part does not carry any
liability for the rejected part. From judgment for the Iowa Company, the
Pacific Timber Company appeals.

Justice Sherwin: This suit was brought to recover the contract price
for the entire car. The only question to determine is whether the contract
between the parties was entire or separable. As a general rule a contract
is entire when by its terms, nature and purpose, it contemplates and intends

that each and all its parts are interdependent. On the other hand, a sever-

-8h—

able contract is one in its nature and purpose susceptible to division and
apportionment. The question whether a given contract is entire or severable
is largely one of intention, and the intention is determined from the language
the parties have used and the subject matter of the agreement.

It is very difficult to lay down a rule which will apply to all cases,
and consequently each case must depend very largely upon the terms of the
contract involved. In this case we think it almost conclusive that the
parties did not intend the contract in question to be severable. It is
hardly conceivable that the plaintiff, living more than 2,000 miles away from
the defendant's place of business, should contemplate the shipment of a car-
load of lumber, although consisting of pieces of different dimensions, with
the understanding or intention that each piece of lumber so shipped should
constitute the basis of an independent contract, so that the consignee should
be at liberty to reject any part of the lumber so shipped and retain the
balance; nor is there anything in the contract itself indicating that the
defendant had any thought that it was to receive other than an entire car.

One test of this contract would be whether the plaintiff could main-
tain an action for the part of the car complying with the contract when the
balance of the car did not comply. We are clearly of the opinion that such
action could not be maintained under the terms of this contract. There are
many decisions to support us, for in the case of Chicago v. Sexton an agree-
ment to furnish ironwork for a building to be erected was held to be an en-
tire contract. Payment was to be fully made when the contract was completed.

Judgment reversed.

-35-

Clark v. Lehigh and Wilkes-Barre Coal Comapny

250 Pa. 30M; 95 A. M62 (1915)

H. T. Clark owned four tracts of coal land, which he leased to the Le-
high and Wilkes-Barre Coal Company, on the basis of $5,000 per year and a
royalty of 35 cents per ton of coal removed. The facts are not particularly
'clear, but it appears that one of the Clark tracts ran parallel and adjacent
to some other prOperty owned outright by the Lehigh Company. Along this
property line, and presumably on Clark’s prOperty, was an old commissioner's
road. The coal under this road was also leased and the royalty paid as on
any other. After twenty years the Lehigh Company discovered that a commission-
er's road is merely a surface easement, with a right to pass and repass, and
that the adjacent or abutting owners own to the center of such a road. The
Lehigh Company refused to pay any more royalties or rent money. Clark brought
action for these moneys, and the Lehigh Company put in a counterclaim for
$50,000 as overpaid rents and royalties. It is claimed that the original
contract for leasing the coal is void because of a mistake of law. From a
judgment for Clark, the Lehigh Company appeals.

Justice Mestrezat: It is not alleged that the Lehigh Comapny was in-V
duced to enter into the lease by any fraud, misrepresentation, concealment,
or other inequitable conduct on the part of Clark. The contract may have
been advantageous to the Lehigh Company but for the fact that it was the own-
er of a portion of this coal.

It is alleged that we are dealing with a mistake of law, pdre and simple,
unaided by any equitable consideration which should move a chancellor to grant
relief. Under these circumstances, it is settled that equity will not relieve
against a mistake of law. The rule is stated by Mr. Pomeroy (2 Pom. Eq. Jur.

(3d Ed.) Par. she) as follows:

-86—

The doctrine is settled that,in general, a mistake of law, pure and simple,
is not ground for relief. Where a party with knowledge of all the material
facts, and without any other special circumstances giving rise to an equity
in his behalf, enters into a transaction affecting his interests, rights, and
liabilities, under an ignorance or error with respect to the rules of law
controlling the dase, courts will not in general, relieve him from the con-
sequences of his mistake.

As a reason for the rule, he says: If ignorance of the law were gener-
ally allowed to be pleaded, there could be no security in legal rights, no
certainty in judicial investigations, no finality in litigations.

The judgment is affirmed.

Singer v. Grand Rapids Match Company

117 Ga. 86; M3 3.3. 755 (1903)

H. L. Singer brought action against the Grand Rapids Match Company on
a contract for the purchase of matches by wholesale. A “mistake of fact"
develOped concerning the number of matches contained in cartons of various
sizes; with the result that the buyer anticiparted receiving five times the
quantity which the seller intended to deliver. Singer brought an action an
gainst the match company for a breach of contract, and the company replied
that there was no contract because of a mistake in fact.

Justice Lamar: The plaintiff insists that they wrote to the defendants,
inquiring as to whether they had not made a mistake in the quotations, and

received a reply that the quotations were correct. The mistake was in the

-37-

make up or construction of the contract, because the quotations were correct.
The defendant will not be penalized because of a misconstruction by the op-
posite party. A slip of the pen or tongue ought not to be treated as a
deliberate contract, unless the other party has acted upon the contract and
it would be unjurious to him to have it rescinded. This doesnot mean that
the authorities intend to let parties out of hard bargains. When such con-
tracts are made, the courts are called upon to enforce them.

The question in this case is, has a contract been made? Did the minds
of the parties meet? Where‘mere has been no fraud, deceit or mist he, where
the terms are clear cud unambiguous, neither party can escape liability by
a mere statement that he made a mistake. If by reason of ambiguity in the
terms of the contract, it appears that one of the parties has, without gross
fault or neglect on his part, made a mistake; that this mistake was knownor
ought to have been known by the other party; and the mistake can be relieved
without injustice, the court will afford relief, either by refusing to degree
specific performance, by cancellation or by refusing to give damages. There

is no disposition in the law to let one "snap up" another or take advantag

F4;

0 his mistakes. In many instances, where one of the parties has made a mis-
take, neither a court of equity nor of law will refuse to enforce the contract.
But where the mistake is Open, where the opposite party knew or should have
known, no contract was made. The minds of the parties have not met, and they

will be left where the mistake places them.

The court did not err in granting non-suit.

~88-

School District Number 1 v. Dauchy

25 Conn. 530; 63 Am. D. 371 (1557)

Dauchy had nearly completed the construction of a séhool house when
lightning started a fire and destroyed the structure. He refused to build
a new school, and the School District Number 1 brought an action for breach
of contract. From a judgment for Dauchy, School District Number 1 appealed.

Justice Ellsworth: The defendant insists that where the thing contracted
to be done, becomes impossible by the act of God the contract is discharged.
This is altogether a mistake. The act of God will excuse the not doing of
a thing where the law created the duty, but never where it is created by the
positive and absolute contract of the party. The reason of this distinction
is obvious. The law never creates or imposes upon anyone a duty to perform
what God forbids or what he renders impossible of performance, but it allows
people to enter into contracts as they please, provided they do not violate
the law.

Where a party by his own contract creates a duty or charge upon himself,
he is bound to make good. He could have provided for this act of God in his
contract; therefore if a party undertakes to repair, the circumstances of the
premises being consumed by lightning, or thrown down by an inevitable flood
of water, or an irresistible tornado, will not effect his discharge. In a
case when the act of God renders performance absolutely impossible, the agree-
ment shall be discharged; as if one covenants to serve another for seven
years, and he dies before the expiration of the seven years. Even in the

case of death, it would be better to say, that the termination of the contract

was implied at the death of either party.

-39-

In the case of Monk v. COOper, where the freighter of a vessel covenanted
to proceed to St. Petersburg and there take a full cargo, but was prevented
by an embargo. Lord Mansfield and other judges held thrt no exception not
contained in the contract itself, could be used as an excuse for its non-
performance. In the case of Burret v. Dutton, the court says, “Ice being
in the Thames rendered it impossible for movement on the river, but this is
not an excuse for nonperformance of a contract to transport certain goods".
In the case of Adams v. Nichols, the court held that where a person contracted
to build a house on the land of another, and the house was before its com-
pletion destroyed by fire. without his fault, he was not thereby discharged
from his obligation to fulfill his contract.

These and other authorities which might be cited, satisfy us that the
law was not correctly laid down in the court below, and concurring as we

do with the doctrine of those cases, we advise a new trial.

AGENCY

Primitive systems of law were ignorant of the law of agency. The parties
to acts in law had to execute them in person. Although over a vast number
of years a system of agency evolved, partially through the influence of the
church and partially through the influence of the people. The peeple elected
individuals to represent them in government and in court, why then could they
not elect or appoint individuals to represent them in business.

There is little Justification for discussing further the evolution and
history of agency, for there were no dynamic changes; it came into existence
slowly and without apparent notification.

Agency is a contract by which one person, with greater or less discretion-
ary powers, undertakes to represent another in certain business relations.

An agent is one who acts for and on behalf of another person called the
principal, in the same manner as the principal might himself act in the
particular matter in which the authority is conferred. It is therefore a
relationship founded upon contract; that is to say, the principal agrees to
confer the authority upon the agent, and the agent agrees to carry out the
authority so conferred.

The authority may be expressed or implied. If the contract is expressed,
there is little occasion for uncertainty. The time, place, and manner of ex—
ecuting the authority, and the conditions and limitations imposed, are
clearly defined. The extent of the express authority may be general or special.
There can be little doubt of the limits of the agent's authority when the
appointment is in writing and is unequivocal, but it is to be borne in mind,
that express authority to an agent may be given orally as well as in writing.
Persons dealing with an agent who has been given express authority are bound
by the extent and limitations of the authority conferred. When third persons

deal with an agent knowing his authority has been conferred in writing, they

-92-

are bound by the written instructions. The burden of the proof is on the
third party dealing with the agent to show that the agent has acted within
the scope of the authority conferred.

If the authority is applied it is very frequently left to be inferred
or implied from the words and conduct of the principal or from the circum-
stances surrounding that particular case. Care must be exercised not to in-
fer too much from the known facts, for in attempting to infer authority of
an agent by reason of the words, conduct or actions of the principal, a reason-
able and fair construction must be placed upon these facts and circumstances.

The courts will not permit a strained and unreasonable construction.

It has been stated that the authority which is to be implied cannot exceed

the natural and legitimate interpretation of the facts from which it is in-
ferred. Implied authority cannot result from mere presumption or hazard I

or from matters of convenience. Certain implications are permissable even
where the authority given to an agent is express, as, under an express author-
ity, an agent has implied authority to do whatever is reasonable and necessary
in the preper execution of his agency. An agent acting under express author-
ity has implied authority to act according to known usages and customs.

As previously stated it is not necessary to have authority conferred in
writing and under seal unless the agent is required to perform an act under
seal. It is the doctrine that authority to execute an instrument under seal
must be evidenced by an instrument of equal solemnity.

Perhaps it would be expedient to define a principal. A principal is the
person for and on behalf of whom the agent acts; the person who confers the
authority on the agent. The principal is the constituent; the agent, the
representative. He who acts through another acts through himself. The prin-

cipal, acting through.the medium of the agent, is brought into contractual

-93...

relationships with other persons, with the same effect as if he made the con-
tract directly. He vauires the same rights and is subject to the same re-
sponsibilities through the act of the agent as if he acted on his own behalf.

It is often said that every agent is a servant, but that every servant
is not an agent. Agency is looked upon as a higher form of employment than
service. A servant is usually not vested with authority to bring third
parties into contractual relationship with the master and usually is not a
factor causing a change of legal relationship between the master and third
persons. It is only where the servant commits a breach of his obligations
or injures some personiin the performance of his master’s instructions that
the master is put under obligations to other parties through the servant's
acts. The servant, therefore, is one who is usually employed by the master
to perform mechanical and ixed duties and is usually not vested with author-
ity to perform, on behalf of his master, acts calling for the exercise of
skill, judgment, or discretion, and generally speaking, is an employee of
more restricted authority than the agent.

Agents are classified or grouped according to the extent of the author-
ity conferred. There are general agents and special agents. A general agent
is one who is empowered to transact all of the business of his principal of
a particular kind, or one who is empowered to transact all of his principal's
business in a particular place. A principal may have more than one general

agent. He may have a general agent in Baltimore and one in New Yerk, and

in each place the agent represents the principal in the particular line of
business delegated to him; or the principal may have a general agent to man-
age his real estate, and one to manage his manufacturing business.

A special agent is one who is authorized to act in a particular trans-

action. He cannot bind his principal in any other transaction than that in

-9h.

which he is given authority. It is to be borne in mind that a special agent
is Just as much an agent as a general agent in the particular matter in which
he is authorized to act. It will therefore by seen that it is the extent of
the authority conferred which makes the agent either general or special.

Another classification of agents including those called universal agents.
A universal agency is not bf common occurrence and, generally speaking, where
the term is used, it refers to an agency wherein a person is authorized to
transact all of the business of a principal of every kind and nature.

It would be difficult in these days of almost unparalleled commercial
activity to overestimate the importance of the place occupied by the law of
agency in the great body of substantive law, and as a branch of contracts.

So extensive have the active business operations everywhere come to be that
no one would expect to find in any community any considerable number of bus-
iness men who have sufficient time and capacity to attend to their affairs
without the assistance of agents or servants. Indeed. it is not too much

to say that the great bulk of the trade and commerce of the world is carried
on through the instrumentality of agents; that is to say, persons acting
under authority delegated to them by others, and not in their own right or
on their own account. The magnitude of this importance becomes still more
manifest when we include also the field covered by the law relating to the
subject of torts, which we do in order to be as thorough as we should be in

our consideration.

J. A. Fay and Wgan Company v. Brown Machinery Company

(Mo. App.) 1h s.W. (2d). LL91 (1929)

The J. A. Fay and Egan Company desired to sell $25,000 worth of supplies
to the Missouri Car Company. The Fay and Egan Company made a contract with
the Brown Machinery Company for their assistance as agents in this sale.
They referred the Brown Company, as they had done many times, to their St.
Louis representative, Mr. J. B. Temple. Temple agreed that Fay and Egan
would pay Brown ten percent for closing the deal. When the deal was closed,
Fay and Egan refused to pay the $2,500 commission, their claim being that
Temple was only a salesman and had no authority to make such a promise to
Brown. Brown relied upon a number of letters from Fay and Egan in which they
spoke of Temple as their "representative". Brown held that a fundamental .
requisite of agency was representation. Therefore, since Brown and Egan
used the word "representative", Brown relied on the apparent authority of
Temple, who promised the ten percent commission to Brown.

It should be noted that Fay and Egan are the plaintiffs, who sued for
$1,7h1.78 for machinery sold.to Brown but not paid for. The Brown Company,
as defendant, merely brought its claim of $2,500 as a counterclaim. In
effect it says, Pay us $2,500 and we will pay you your $1,7hl.78.

Justice Haid: The plaintiff asserts that Mr. Temple was a salesman and
could not bind the plaintiff in this contract. But the defendant disclosed
several letters which referred to Mr. Temple as "our representative" and
therefore the defendant had every reason to believe Mr. Temple was a repre—
sentative. According to Webster's dictionary, a representative is defined
as "One who represents another in a special capacity: an agent, deputy or

substitute". A ”salesman" on the other hand is defined as "One whose oc-

cupation is to sell goods or merchandise".

The plaintiff may not have given the power of agent to Mr. Temple, but
it appears to accord with the definition of apparent authority commonly
given in text books. Apparent authority is such authority as a reasonably
prudent man, using diligence and discretion, in view of the principal's con-
duct, would naturally suppose the agent to possess. The conclusion of the
defendant was justified.

This point (on $2,500 commission) must be ruled against the J. A. Fay

and Egan Company.

Acme Gravel Company v. Bryant

295 P. 909; 111 Cal. App. #11 (1931)

The Acme Gravel Company brought an action for $2,153.28 for gravel
furnished in the construction of an apartment hotel. The defendant,
J. A. Bryant, replies that through the arrangement with the Acme salesman,
Hugent, payments of 75 percent in cash plus 25 percent in preferred stock in
the hotel corporation were agreed upon. Acme replies that Nugent never
had that authority. From a judgment for plaintiff, defendant brings the
present appeal.

Justice Lucas: Bryant produced one witness, namely, Robert F. Morris,
engineer and second in charge who testified that one Nugent, salesman for
Acme, solicited from him an order for the building materials in question

and was told that to secure the order it would be necessary for Acme to take

25 percent of the value of the materials in stock.

-97..

William H. Ford, president and sole owner of the Acme corporation,
testified that neither he nor anyone else in authority had ever authorized
Nugent to negotiate a sale of materials for anything Other than cash, and
that he never accepted anything but cash for materials. The first time he
had ever heard of Bryant's contention was after Bryant was pressed for pay-
ment. He further testified that Nugent had admi ted to him that while some-
thing had been said about taking stock as part payment for the materials, there
was no agreement to do so. Nugent did not appear as a witness at the trial.
his whereabouts being unknown.

It is Bryant's contention that evidence is sufficient to justify the
conclusion that hugent did enter into an agreement to take part payment in
corporate stock even if by so doing he violated positive instructions. The
theory is advanced that one who employs another to make a sale becomes re-
sponsible for the methods which he adOpts in so doing.

The court contends that the principal should be responsible when dif-
ferent acts and transactions of the agent which had been either permitted
or acquiesced by his principal and which were sufficient to lead those with
whom the agent was dealing to believe that he was clothed with ample power
and authority, In other words, if a case of ostensible agency as clearly
established.

“Actual authority is such as a principal intentionally confers upon
the agent, or intentionally, or by want of ordinary care, allows the agent
to believe himself to possess."

"Ostensible authority is such as a principal intentionally. or by want
of ordinary care. causes or allows a third person to believe the agent to
possess."

In this case there is neither proof of actual authority nor of any act

-95-

or omission on the part of the Acme corporation, or any of its officers.
sufficient to establish ostensible authority.

1' ".a- .0!‘:.
uudbment aiiiined.

Springfield Engine and Thresher Company v. Kennedy
3h N.E. 856; 7 Ind. A,p. 502 (1893)

James B. Mitchner was the agent at Kokomo, Indiana, for the Springfield

engine and Thresher Company and as such sold John H. Kennedy a grain separator,

payment partly in cash and partly by promissory notes, with a chattel mart~cse

*1 V1.5.

95.4

against the machine as security for the notes. The contract of sale guar-
anteed the machine as security for the notes. The contract of sale guar-
anteed the machine, but required a written complaint of any defect which the
company might be liable for The agent made definite promises regarding the
good working order of the machine and agreed to fix anything which was
wrong. The machine was unsatisfactory; Kennedy refused to pay the notes
due, and the company now brings this action on the notes to foreclose the
chattel mortgage. Judgment for defendant in lower court. The company now
appeals saying that hitchner was a special agent and had no authority to
make the warranties and promises which he had made as a means of closing
a sale.

Justice Lotz: The appellant contends that the findings do not show
that Mitchner was their general agent at any time, and therefore did not

have the authority to waive the conditions in the contract of :arranty.

The terms "general agent" and "special agent" are relative. An agent may

-99...

have the power to act for his principal in all matters. He is then strictly
a general agent. He may have the power to act for his principal in particular
matters. He is then a special agent. Mitchner was authorized to make sales
for the appellant’s machinery in certain localities. His powers for that
purpose were general, and V th reference therto he was a general agent. The
contract made in the first instance was not an uncondiflonal contract for the
sale of the machine. Kennedy had the right to return it if unsatisfactory.
Mitchner as a general agent, when he received notice of the defects in said
machinery, the notice to him was a notice to his principal. For it is a
general rule "that notice to an agent of a corporation relating to any
matter of which he has the management and control is notice to the corpor—
ation". Mitchner's subsequent acts and promises were in the line of per—
fecting the sale. We think he had the right to waive the written notice
re-quired by the contract and of the other stipulations therein contained
which were for the benefit of the appellant.

Judgment affirmed.

Kruse v. Revelson

155 r.s. 137; 115 on. St. 59h; 55 A.L.R. 289 (1927)

Frank Kruse constructed a certain part of a building for Isadore Re-
velson who previously had let the general contract to the Golden Building
Company. The present action is for labor and material furnished in con—
struction. The owner, Isadore Revelson, alleges that he made a contract

with Golden for the buildi.r, and Frank Kruse is a mere subcontractor and

-100-

should therefore get his money from Golden. Kruse replies that the con-
tract was for cost plus $300; that Revelson often paid the subcontractors
on the job directly; that such things indicate a mere agency; that Reveléon
is the principal and that Golden is the agent; and that Revelson is liable
for Golden's actions in hiring Kruse. The lower court decided for Revelson
and Kruse now appeals.

Justice Robinson: The legal question is, Do the above facts create the
relationship between Revelson and the Golden Building Company of principal
and agent, or do they create the relationship of owner and independent con-
tractor?

The contract between Revelson and the Golden Building Company, whereby
the Golden Building Company for a money consideration, the amount of a part
of which was definitely fixed, and‘the basis for the ascertainment of the
balance of which was likewise definitely fixed, agreed to produce a certain
result, namely, the completion of a building, without retention by Revelson
of the power to impose his will upon the Golden Building Company in the
manner of accomplishing the result. SUCh a contract does not create the
relationship of principal and agent. We are unable to see any distinction
between this contract and the contract between Iruse and Golden Building
Company. The relationship is the same. '

The fact that some of the payments for labor and material were made by
Revelson direct to the subcontractors, upon the order of the principal con-
tractor, does not distinguish the contract from the character of contracts
that pay to the principal contractor upon estimates.

Judgment affirmed.

-lOl-

Thomle v. Soundview Pulp Company

M2 P. (21) 19; 181 Wash. 1 (1935)

Kristine Thomle and others sought action to prohibit the consolidation
of certain logging and mill prOperties. Thomle and others had formed a
syndicate for the purchase of timber interests, had deposited money in the
syndicate for which they received "units" indicative of their shares of
interest, and finally appointed a manager of the syndicate with very ex-
tensive and broad authorities. Thomle contends that the agent had no author-
ity to exchange the “units“ for "shares" in a new corporation. The contro-
versy turns on the effect of the express terms creating th, agency.

Justice Steinbert: Viewing the syndicate arrangement as an agreement
rather than astijuridical entity, we have this situation: The syndicate
members, including the respondents, entered into a contract with each other,
as well as with the syndicate manager, by the terms of which specified sums
of money were pooled to be invested by the manager, with the hepe and es-
pectation of ultimate profit. The parties deliberately adopted a plan or
arrangement which they considered the best means for effectua ing their in-
tention and object. The manager was given broad and almost unlimited powers,
with the added provision tiat such powers were to be accorded the most li-
beral construction. The manager was to have entire control of the business
and .ffairs of the syndicate, with the unqualified authority to enter into
any and all agreements, deemed by it expedient to carry out its terms. The
only limitation placed on the syndicate manager was the exercise of good faith
and the absence of willful misconduct. These powers were sweeping in their
significance and effect, but each of the syndicate members entered into the

agreement fully apprised of its legal consequences. Each had the right to

-102—

refrain from entering into the agreement, but he also had the right, if he
did enter into it, to expect and demand that all the others would likewise
be bound.

There is little doubt the authority of the manager was sufficient to con-
cede to him the power of agent for the syndicate members. This authority
was fully and unambiguously declared in the agreement.

hot only must we view whether the manager had proper authority for his
act, but also whether the discretion of the manager was soundly exorcised.

We contend that an anomalous situation would be presented if “,185 units,
represented YMG individuals, content and malcontent, were put in charge of

an industry having the prOportions of the one here involved. Every practical
and logical standpoint, necessitated the metamorphosis of syndicate units
into stock certificates. "e hold that the syndicate manager had the author-
ity to make the exchange and that his discretion wassoundly and prOperly

exorcised in making the transfer.

Bucks-Brandt Construction Company v. Price

23 p, (2.1) 690; 165 01:1. 178 (1933)

C. C. Silver, a mason foreman of the Bucks-Brandt Construction Company,
was injured in he course of his employment, filed a claim with the State
Industrial Commission, and received an award for 500 weeks. The Southern
Surety Company, the insurer of the Construction Company, became bankrupt.
Silver then sought a court order to force the Bucks-Brandt Construction Com-

pany to pay the weekly compensation for the period remaining in the 500 week

-103-

award. Meanwhile the construction company brought the present action against
the Sheriff, Charles Price, and C. C. Silver to restrain them by an injunction
from proceedings, alleging that the commission award was not binding on the
construction company, since they had received no notice of hearing of the
case before the State Industrial Commission. Price and Silver reply that
the construction company had by contract delegated the Southern Surety
Company as its agent to appear before the commission and had shown such de-
finite intent by the contract of insurance,

Justice Swindall: Tie trial court found that no notice had been
served upon the plaintiff, but found the attorneys for the Southern Surety
Company appeared and represented the plaintiff. They were authorized to do
so by the terms of the plaintiff's policy with the company.

One of the articles in the law among other things provides:

To defend in the name and on behalf of this employer, any suits or
other proceedings which may at any time be instituted against himon account
of such injuries, including suits or other proceedings alleging such in-
juries and demanding damages or compensation therefor, although such suits.
other proceedings, allegations or demands are wholly groundless, false or
fraudulent.

It is contended by the plaintiff that the clause "to defend in the name
and on behalf of this employer, any suits or other proceedings which may
at any time be instituted against him on account of such injuries" constitutes
an obligation and not an authority, and did not authorize the insurer,
through its attorneys, to enter plaintiffs appearance in the proceedings and
defend its behalf so as to bind it personally by the award. But under the
agency laws an obligation is defined as a "duty” and authority as "the lawful
delegation of power by one person to another”. It is thus evident that an ob-

ligation may contain an authority. The provision of the plaintiff's policy

401+.-

placed the insurer under a duty to proceed to a settlement "upon notice of
such injuries" and to defend, "in the name and on behalf of his employer",
proceedings, "instituted against him on account of such injuries". The
authority granted might have been withdrawn at any time, such as between a
principal and agen . So we hold, that in the present case the Southern Surety
Company was authorized to bind the plaintiff and under its duty to conduct

the matter to a final adjustment. We also hold that Southern Surety Com-

pany was authorized to enter plaintiff's appearance and act in its behalf

so as to bind it personally under the clause of the policy.

Judgment affirmed.

Henry Cowell L. and C. Company v. Santa Cruz
County National Bank

255 P. 881; 82 Cal. App. 519 (1927)

A. S. T. Johnson was an agent of the Henry Cowell Lime and Cement Com-
pany, and managed their business in Santa Cruz, California. He sent out
bills, received checks, which he deposited, and drew checks on the company
account. Johnson now appears short in his accounts, and the Cement Company
contends that Johnson had no authority to draw money from this account and
so the ban: wrongfully paid on Johnson's signature. The amount involved is
$1,007.hh. From judgment for defendant, plaintiff now appeals.

Justice Tyler: The plaintiff demands of the defendant a repayment of
these checks that their agent wrongfully indorsed and cashed. The defendants
refuse.

The main issue raised is whether Johnson had ostensible authority to in-

-105-

dorse and cash the checks. It is claimed by the plaintiff that the agent did
not. It may be stated that ostensible authority is defined to be such as a
principal, intentionally or by want of ordinary care, causes or allows a
third person to believe the agent to possess. Ordinarily an agent authorized
to receive checks in payment for his principal may not have authority to
indorse and collect the same. On the other hand he may have the apparent
authority, and a bank cashing the check would not be compelled to pay again.

In order to establish the fact that Johnson had the authority by impli-
cation, the defendant called many witnesses. It appeared therefrom that
Johnson was employed for many years by the plaintiff corporation and that
his duties were not confined, as alleged in the complaint, to those of mere
bookkeeper, but rather as a manager of plaintiff's extensive business, and.
that his acts as such were sufficient to warrant those dealings with -im in
believing that he possessed authority to do the very acts in question.

We therefore conclude that Johnson had the authority and when one of two
innocent persons must suffer, the loss should be borne by him whose act made
the loss possible.

Judgment affirmed.

Bredel v. Parker-Russell Mining and Manufacturing Company

(App.) 21 s.w. (2d), 932 (1929)

Fred Bredel, a gas engineer is suing for $2000 as compensation for ser-
vices in designing certain gas ovens for an installation in Kalamazoo, Michi-

gan. He relies on a contract of employment with Mr. Leigh Wickham, vice

president of the Parker-Russell Mining and Manufacturing Company. The evi-

-106—

dence indicated that Wickham had authority to hire such a designer, but the
company contends that Wichham had no authority to promise the $2000 compen-
sation. The controversy then turns on whether the authority to hire carried
with it the implied power to fix the compensation. In other words, was it
necessary to tell Bredel how much he would be paid in order to hire him. From
a decision in the lower court in favor of the plaintiff, defendant now appeals.

Justice Bennick: Generally speaking, the rule of agency is that every
express delegation of power carries with it the power to do all those things
which are reasonably necessary and proper to carry into effect the main power
conferred. Whether an incidental power is a necessary one is a jury question
when the conclusion to be drawn from the facts and circumstances of the case
are not obvious one way or another.

t may be reasonably argued that the unrestricted and unlimited power

conferred upon Wichham to employ the p aintiff carried along with it the
power to bargain for the compensation to be paid. This is a jury question.
But there is more to the case than a mere presumption, for the evidence
shows that the plaintiff was sent to Wickham by the president, with the as-
surance tlat whatever Wichham did would be all right with him.

Therefore we think there was ample evidence of Wickham's power to bind

his principal. Judgment affirmed.

Texas Building Company v. Drs. Albert and Edgar

57 Tex. Civ. 399- 633; 123 S.W. 716 (1910)

Justice Rice: In the case at bar there is no question made as to the

reasonableness of the charge of these physicians; but the only point of con-

-107-

tention on the part of the appellant seems to be that Barnes, its foreman,
did not have the authority to bind the company to pay for the services of
said physicians. The facts disclosed that Keasler was a poor man, unable
to buy the necéssary services of these physicians, of which he was in ur-
gent need. The main office of the superintendent was in a distant city.
Prompt action was necessary in order to save the life of the injured man.
Barnes, the foreman, was on the ground in charge of the crew, With full
authority to employ and discharge them and to do all other necessary things
for conducting the said business. He urged the physicians to do all in
their power for Keasler, suggesting they procure a specialist, if in their

judgment it became necessary to do so. One of the physicians, knowing both

1. I!

4

Barnes and Keasler were employees of the bLilding company and that Barnes
was foreman, relied upon‘the conduct of the foreman as su,posing that the
company would pay therefor.

We believe that Barnes, its only representative at the time, was author-
ized to do whatever was necessary to alleviate the sufferings of Keasler,
and it seems, from what was said and done by him, that the physicians reason-
ably believed that he had the authority to employ them and bind the company
to pay their services. We are inclined to believe that whenever a company
employing laborers sends them out under the supervision and control of the
foreman. he not only had the implied authority and power to do all things
that are incidental to the work at hand, but all things that might be neces-
sary for the master’s interests.

The principal of justice and the dictates of humanity, in our judgment,
as well as the law, imposed upon the company under the circumstances the
duty to furnish the wounded an medical aid.

Judgment affirmed.

-108-

B. and W. Engineering

137 P. 62b; 2

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The B. and 3. Engineering Company, the plaintiff, agreed to clear up
a lot for I. W. Beam. After the work was done, E. D. Crowley, the represent«
ative of the plaintiff, accepted $1,070 as payment in full for services. It
was a complicated transaction, and the figure was a compromise between Crowley
and Beam. The 3. and V. Engineering Company received andused the $1,070; but
several years later brought the present action, denying there ever was an
"accord and satisfaction" or compromise since Crowley had no authority to act.
From a judgment for the defendant, plaintiff appeals.

Justice Lennon: The contention of the plaintiff hat Crowley was merely
a foreman of the work and was not expressly authorized nor ostensibly empowered
by virtue of his employment, to accept less than the full sum in dispute.

This contention is answered by the record before us, which shows inequi-
vocally that it was an admitted fact that he was an acknowledged and author-
ized business manager. The question as to whether Crowley therefore had the
authority to change the claim in the controversy need no be discussed for the
acceptance and retainment of the mtney paid to Crowley is an expression that
it was a full settlement of the disputed claim. This acceptance is without

doubt tantamount to an eXpress ratification of the compromise made by Crowley.

Judgment affirmed.

-109-

Prong, Smulion and Company v. Outcault Advertising Comapny

168 3.3. 1075; 11% A a. 9 (191M)

Gavin, an agent for Prong, Snulian and Company, contracted with the Out~
cault Advertising Company for an c.dvertising campaign. The Froug Company
used only part of the cuts, but Outcault billed for the entire amount. Gavin
had apparently told his superiors that they would have to pay only for what
they used. Froug Company claims that the transaction is void, since Gavin
did no have authority to make the contract. The advertising company replies
that, even though urm1uthorized, the contract was ratified by the use of some
of the cuts; and ratification of a part of an act of agency ratifies the whole.
From a Judgment for plaintiff, Froug, Smulian and Company appeal.

Justice Smith: The principal, of course, is not bound by the authorized
act of his agent, who acts without the apparent scope of his authority. But
he may ratify his agent's unauthorized act, and when he does so he becomes
completely bound as if he had conferred upon his agent the authority to do
the act, in ouestion. This is an elementary principal of the law of agency.
Ordinarily, the principal is not held to have ratified, the acts of his agent
if he is ignorant of his agents action, but such lack of knowledge cannot al-
ways afford immunity from liability, and does not do so at all if, with know-
ledge that an unauthorized contract has been made in his name, but without
information as to its details, he permits its performance and enjoys its
benefits.

The appellants knew a contract had been entered into in their name and
was being performed by appellee, A letter was introduced in evidence ad-
dressed by appellee to appellants, thanking them for their partonage. In

this letter there was a notice that some kind of an order or contract had been

made.

-110—

Upon being advised their employee had executed a contract in their name,
without authority, appellants had the right to repudiate it, but they could
not ratify it in part and repudiate it in part.

Appellants say Gavin misinformed them as to the terms of the contract.
Even if this is true, the epjellee was in no way responsible for the fact.

Judement affirmed.

Q

Lion Oil Company v. Sinclair Refining Company

252 111. App. 92 (1929)

A feud existed between the Lion Cil Comnanv and the Sinclair Eefininr
6 k.)

The records indicated that the Sinclair Company's salesmen told certain Lion
staion operaters that the Lion Oil Company was on the verge of bankruptcy.
There was testimony that money had been offered and even paid to Lion operators
to change over to Sinclair gasoline. The Lion Cil Company contended that
slanderous statements were made by salesmen of the Sinclair Company, and that
that company was liable for the torts or wrongs committed. The lower court
granted a verdict of $100,000 to the Lion Crmpany, and the Sinclair Company
appealed.

Justice Wilson: There is ample evidence in the record in support of the
prOposition that the slanderous statements of the agents received the full
support of the Sinclair Company and their acts, in circulating untrue words,
were ratified by their employer.

It is urged, on behalf of the Sinclair Company on this appeal, that,

-111-

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under law they should not be held responsible for unauthorized utterances of
one of its salesman and cites cases in support of this contention. The rule
in this state appears to be that a principal is liable to third persons for
a tort which he has expressly authorized or directed his agent to commit.
He is also liable for a tort committed by his agent afterward ratified and
affirmed by himself.v It appears to be the rule also in this state that the
principal is liable for the tort of an agent committed within the scope of
his employment.

As has already been stated, the fact that this course of slanderous state-
ments was followed by the payment of money by the Sinclair Corporation to
the customers of the plaintiff, certainly indicates a confirmation and an af-
firmance of the acts of its agents in attempting to procure the business of.
the Lion Oil Company.

Judgment affirmed.

Mississippi Valley Construction Company v. Charles T. Abeles and Company

112 53d. eat; 87 Ark. 371+ (1908)

Mr. E. F. Bain was the agent of the Mississippi Valley Construction
Company and had definite instructions to purchase lumber for a certain job
from the Rock Creek Lumber Conpany. Bain disobeyed and purchased lumber
from Charles T. Abeles and Company. Abeles looked upon Bain as an independent
individual, and extended credit to Bain personally. However. when Abeles
learned of the Mississippi Company as principal, he immediately elected to

hold the principal. The principal now replies that the act was unauthorized

-112-

and Abeles' only recovery is efiainst Bain. Judgment in lower court was

for Abeles, the plaintiff, and the Mississippi Valley Company now appeals.
Justice Wood: While Bain purchased the material sued for in his own

name, and without disclosing his principal, and while credit was extended to

him as the supposed principal, it was nevertheless true that he was agent

of appellant construction company, and was clothed with the authority to

buy the material to be used in the construction of the building. The proof

shows that the appellee did not know that Bain was the agent of the construc-

tion company when the credit was extended to him, and that as soon as the

agency was discovered the appellee elected to proceed against the construc-

tion company. The doctrine is well settled that where a party deals with

an agent without any disclosure of the agency, and without any knowledge

thereof, he may elect to treat the after-discovered principal, and hold

him alone responsible for the debt, providing the election is made withi

a reasonable time after the discovery. The agent Bain, under the proof was

certainly clothed with the a-parent authority to make the purchase from the

appellee. This being true, the appellant construction company was liable

notwithstanding any secret instructions to Bain to purchase material from

another.

Judgment affirmed.

Elco Shoe Manufacturers v. Sis;
183 3.3. 101; 260 r.Y. 100 (1932)

2'

John P. Murphy was a salesman under contract with the Elco Shoe Hanu-

facturing Company, makers of high-grade ladies‘ shoes. The contract provided

-113-

that Eurphv could sell other makes of shoes provided they were not competing.

I,

1

However, he took over tne line of Chandler shoes and in a single year sold
$10M,000 worth, while the Elco sales fell off $150,000. Elco sued Murphy,
bringing an action for breach of contract and general accounting, basing

their suit on the disloyalty of Murphy. Murphy answered the charges by
instituting a counterclaim for $32,212.70 for unpaid commissions and wrong-
ful discharge. The lower court gave verdict for Murphy on the basis that

two lines of shoes were not in the same price range, and were therefore not
competing, under the contract. 31cc appeals. Murphy has since died, and this
appeal was brought against Willie. E. Sisk as executor of the estate of Iurphy.

Chief Justice Pond: If the Chandler shoes which Murphy sold were com~
peting with the plaintiff's line within the fair intent and meaning of the
contract, then Murphy's conduct in selling such shoes was a violation of
his contract with the plaintiff as a matter of law. "What a contract means
is a question of law."

The trial court defined competing shoes as "those so similar in price
design, style, material, workmanship and other characteristics as may fairly
leave ordinary and reasonable retail dealers in such doubt in making a
choice between them as to permit the skill of a salesman to become a deter-
mining factor". We do not adopt this principle in this case. We contend
that no man can serve two masters with equal fidelity when rival interests
come into existence. Agents are bound at all times to exercise the utmost
good will to principals. They must act in accordance with the highest and
truest principals of morality. The question here is not so much a technical
definition of the word "competition" as used by shoe dealers as it is a

question of loyalty and fair dealings. An agent is not loyal when he offers

for sale a choice between a ladies' high-class turned shoe and a cheaper

-11u.

shoe resembling the former and offered to trade as such. The cheap article
competes with the higher priced if the two superficiallr' resemble one another
in appearance. Whether Murphy pushed the Chandler shoe or not, he offered

a fine high-priced shoe, and one not so expensive, but practic-lly the same

in appearance except to the trained observer. This seems tube real and

active competition. He not only sold shoes which were almost in active com-
petition with the Elco shoes, but in one instance at least he told the
Chandler peOple how to disguise an Elco design so as to produce an initation
thereof and sold the product.

Reversed orx the counterclaims and an accounting ordered.

Pine Bluff Ifon Works v. Arkansas Foundry Company

5M s.w. (2d) 299; 186 Ark. 532 (1932)

The Pine Bluff Iron Works acted as agent for the Arkansas Foundry Com-
pany in furnishing certain steel for the construction of a store building.
As the contrdnor paid the Pine Bluff Iron Works, they in turn paid the foundry.
In the case in controversy, the Pine Bluff received a check from the contractor
and deposited it to its own account. Then it drew a check of its own to the
foundry, but the bank failed before the check returned from the clearing
house. From judgment in favor of the Arkansas Foundry Company, the Pine
Bluff Iron Works appeals. The controversy turns on the commingling of funds
by an agent.

Justice Kirby: The appellant according to his own understanding was au-

thorized to collect for the materials, and could not. of course, accept other

-115-

than the money in payment therefor. The undisputed testimony shows that he
deposited the money received for the materials in his own be h to his own
credit without anything to ind cate that he received it on account of or

for his principal, or anything to indicate that it was not his own money, and,
having so deposited it, he became liable for the loss of it throught the

bank failure. Of course, if he had deposited it to his principal's credit

or in such a manner as to indicate that it was not to his own personal
account, such would not have been the case.

Judgment affirmed.

Lukens Iron and Steel Company v. Hartmann-Greiling Company

172 n.v. 89M; 169 Wis. 350 (1919)

A. M. Castle and Company were the western sales agents of the Luhens
Iron and Steel Company. Hartmann-Greiling Company had a contract of $105,000
for the construction ofla United States Dredge by April h, 1916. There was
a penalty for late delive y. Castle secured the steel contract for the Lukens
Iron and Steel Company, but the steel was so latein delivery that the dredge
was made late, and the United States put a $1000 penalty against Hartmann
according to the contract. Hartmann brings an action to recover a $1000 as
d.mages against the Lukens Iron and Steel Company for their late delivery
and consequent penalty. The steel company admits that Castle was their
agent, but says they never knew the steel had to be rushed. Hartmann replies
that the agent, Castle, knew it was a time contract for the United States
Government, under penalty of prompt completion, and that knowledge of the a-

gent should have been transferred to the principal.

~116-

Justice Kerwin: We are satisfied the evidence shows that A. K. Castle
and Company were agents of plaintiff, and that plaintiff was bound by their
acts and knowledge. A. M. Castle and Company knew the terms of the govern-
ment contract, at least as early as August 17, 1915, and knew it was a
penalty contract. Their knowledge was the knowledge of the plaintiff, hence
plaintiff was chargeable with such damages as might fairly and reasonably
be considered as arising from such a breach of contract.

Judgment affirmed.

Kaufman Metal Company v. Atlantic Refining Company

105 3.3. 373; 26 Ga. App. 100 (1920)

'Chief Justice Broyles: The Atlantic Refining Company of Brunswick, Ga.,
gave to H. C. Willer Company, Jacksonville, Fla., an order for a one yard
concrete mixer. The refining company on the request of the Willer Company
sent A. J. Wright, one of its employees, to Jacksonville to inspect the mix-
er, which he did and, after the inspection he wrote across the order the
following words: "Above inspected and accepted for Atlantic Refining Com-
pany. A. J. Wright, Traffic Manager". The machine was subsequently ship-
ped to the refining company by the Kaufman Metal Company of Jacksonville,
and the refining company refused it. The Kaufman company brought suit
against the refining company for the agreed purchase price of the machine.

The undisputed evidence in the case showed that the machine inspected
by Wright and shipped to thexrefining company was not a one yard mixer as

ordered, but it either was a half or three-quarter yard mixer, and that the

-117-

the refining company wanted a one yard mixer only. It is also undisputed
that Wright had no authority to accept the machine for his company but his
authority was limited to inspection only and he inspected the machine as
to its mechanical condition. He believed the mixer was of a capacity or-
dered, for he did not have the technical knowledge necessary to determine
such a capacity.

We belkye the refining company was legally justified in refusing to
accept the machine.

Judgment affirmed.

Pope v. Wheatley
Tex. Civ. App. 5h S.W. (2d) 8M6 (1932)

I. H. Anderson was made general agent of C. R. Pope for the procuring
of an oil lease and the drilling of a well. Owing to an error, the work was
started on the prOperty of S. H. Wheatley, rith resulting damage to a field
of grain. As a result of the controversy over the damage to the creps. An-
derson and Wheatley submitted the matter to a board of three arbitratorsg.
who awarded Wheatley $125. damages. Pope refused to pay, the lower court
ordered payment, and the court of civil appeals of Texas also affirmed
the award. Pepe retitioned this latter court for a rehearing, alleging that
Anderson had no authority to refer the matter to a board of arbitration,
since the general agent cannot delegate such matters to arbitration without

special authority from the printipal.

Chief Justice Hickman: The only question of law presented for our de-

-118-

5‘:

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L_)

cision is: Under the foregoing findings, did I. N. Anderson, as agent of
the appellant POpe, have the authority to bind POpe by his act in submitting
the controverted matter to arbitration? The reference of a dispute to ar-
bitration is an extraordinary method of settlement usually employed by an
agent. It is not a method of settlement, usually employed by an agent,
and the authority thus to settle a dispute is not one of the implied powers
of a general agent. There are many decisions which verify this conclusion.
Our original Opinion will be withdrawn, and this Opinion on rehearing
substituted, therefor. The judgment in favor of appellee against Anderson

‘

will not be disturbed, since no appeal was prosecuted therefrom.

Buick v. Strndard Oil Company

230 N.Y.S. 192; 22% App. Div. 299 (1923)

Justice Whitmeyer: Plaintiff was shot in the leg and seriously injured
on August 1M, 1927, at about 3 a. m. by one Burton J. De Garmo at a gas
filling station, belénging to the defendant, the Standard Oil Company.

De Garmo conduxed the station for the defendant and was watching it at the
time. He claims that he thought that the plaintiff was trying to steal gas-
oline and that he shot, aiming at the ground, to frighten him away. Whether
or not DeGarmo is liable for his act is the only question. De Garmo worked
under a contract, in writing, which referred to him as "agent" and to the
defendant as the “company". Under the contract, De Garmo was to sell on
commission, to have the charge and custody of the prOperty and the merchandise

at the place, and was to take care of and be responsible for the name. Pro—

-119-

tection of the prOperty was among is duties.

The nature of his act, then, is the question. whether it was within the
general sc0pe of his employment, while he was engaged in defendant's business,
and was done with a view to the furtherance of the business, or was done solely
to effect some purpose of his own, If the former, the defendant is liable
whether the act was done negligently, or wantonly, or even willfully. If the
latter, the defendant is not liable. Usually the question is one of fact.
he gas station had been burglarized three times shortly before and articles
had been taken and the pump had been broken. Although De Garmo had various
merchandise in the station such as soft drinks, tobacco and smokers's supplies
we do not believe he was watching the station primarily for his own interest.
He was on the watch to prevent thieving and in so doing he was acting within
the general SCOpe of his employment and with the view of ‘rotecting the def
fendant's interest, and therefore does not alleviate the liafility of the de-
fendant because De Germo's own interests were automatically protected. The
question was one of fact for the jury and.was resolved against the defendant.

The judgment should be affirmed.

{agnolia Petroleum Company v. Guffey

(Tex. Civ. App.) 59 s.w. (2d) 17% (1933)

Bob Lawson ran a gasoline station and this court treats him as an agent
of the hcgnolia.Petroleum Company. When the defendant, Grady Guffey, came
into the gasoline station to purchase gasoline and cash a check, Lawson drew

a gun and held Guffey captive, because he alleged the check was no good, and

because the peace officers were after Guffey. Finally Guffey was released

-l20—

to get the check cashed. He returned immediately with the money, when

Lawson again held him with a gun for over an hour. Guffey then brought an ac-
tion in the lower court and received judgment of $h,625 as compensation from
he principal, Magnolia Petroleum Company, for false imprisonment. The de-
fendant now appeals, saying that Lawson was not within the sCOpe of his em-
ployment, when he detained Guffey.

Justice Funderburk: The principal is liable "for all of the torts which
his agent commits in the course of his employment". This rule has been up—
held by many decisions. The decisions in this state have established the
following proposition:

A principal is ordinarily liable for the willful tort of an agent acting
within the general sCOpe of his employment for the principal‘s benefit, re-
gardless of the fact that the agent was actuated by personal malice and re-
gardless of the fact that the agent disobeyed orders or instructions. Thus
a principal, whether an individual or a corporation, is liable to the extent
of actual damages for the willful tresspass of his agent committed in the
course of his agency, even if done against the principal's orders. Again
a principal may be liable for slanderous words spoken by a duly authorized
agent in the scope of his duty. But liability in any case is depesient upon
whether the agent was acting within the sc0pe of his authority.

To contend that the principal is as a matter of law not liable for a false
imprisonment and assault of an agent because he did not give his agent authority
to falsely imprison or assault is analagous to contending the principal is
not liable for the negligence of his agent because he did not give his agent
authority to be negligent.

This case shall be remanded for a new trial on the grounds of whether

Lawson acted in pursuance of his principal's business.

United States v. Pan-American Petroleum Company

' 55 F. (2d) 753 (1932)

During a transaction for leasing oil lands of the United States, charges
were made that the agent of the United States. Mr. Fall, acted in conspiracy
with the third-party purchaser of the oil leases to defraud the United States
as principa_. The present suit seeks to declare void all these oil leases.
The lower court gave judgment for the defendant, Pan-American Petroleum Com-
pany; and the United States now appeals.

Justice Sawtelle: When Fall, the agent. accepted a "loan" from the Pan-
American Company he became thereafter incapable of properly representing the
United States of America in any dealings with his benefactor. Although the
defrauded principal occasiOnally may be benefitted by certain transactions
entered into in his name by the disloyal agent does not deprive the principal
of his right to repudiate the barg'in.

When the parties entered into the agreement they poisoned the spring of
fair dealings between the government and the Pan-American Company. In the
case of he United States v. Mammoth Oil Company , it was held:

‘If a governmental official, engaged in making contracts for the govern-
ment, receives pecuniary favor from one with whom such contracts are made, a
fraud is committed on the government, and it matters not that the government
is subjected to no pecuniary loss, or that the contract might have been an
advantageous one to it. The entire transaction is tainted with favoritism,
collusion, and corruption, defeating the preper and lawful function of the

government.

Reversed and judgment for the United States.

~122-

Porter Construction Company v. Berry; Duke et a1

29% P. 179; 136 Or. so (1931)

J. P. Duke acted as agent for N. E. Berry in certain building construc-
tion in the city of Seattle. The Porter Construction Company was retained
by Duke to do the excavation work. They had received $6,000 for part of the
work. and now brought an action for an unpaid balance of $3,8M5.07. The case
was brought against Duke. However, Duke is appealing from an adverse Judgment
in the lower court, allegin? that he was a mere agent, that he had no finan-
cial interest in the project. and that he never guaranteed that Berry would
pay his bills. Duke further charges that Porter Construction Company knew
these facts.

Justice Rossman: Duke testified that he had no personal interest in either
the prOperty or the construction of the building, and that he made no engage-
ments with the plaintiff in his individual capacity of any character. Berry
and Duke were acquainted with one another, and during the times when Berry
was absent Duke actedzs his representative in supervising the excavation.

The question is whether the above testimony is capable of sustaining a
judgment against Duke for the cost of making the excavation. According to
the testimony of the plaintiff it cannot be doubted Duke was acting as agent.
and as his capacity was well known to the plaintiff he is free form any lia-
bility.

Action against Duke dismissed.

-123-

J. Dwight Palmer v. The Marquette and Pacific Rolling Mill Company

32 Mich. 27h (1375)

Justice Cooley: The plaintiff sues the defendants for breach of contract
whereby as he alleges he was employed by them as dock superintendent at their
works at Marquette. The contract is alleged to have been made August 8, 1372
for one year from August lu, 1872. Plaintiff entered upon employment on the
day last named, and was discharged January 1. 1873.

The plaintiff gave as testimony tlat the oral negotiations between H. A.
Burt, the agent of the defendants and himself, were about employment at two
thousand dollars a yea , but Burt thought the sum too high. This was on the
first day of August. 0n the seventh day of August Burt sent him the following
telegram:

Chicago, Aug. 7,l872

To Dwight Palmer: You may come on at once at salary of two thousand con-
ditional only upon satisfactory discharge of business.

H. A. Burt, Agent

It was this telegram with the previous negotiations, that the plaintiff
relied upon to be a contract.

As he had counted upon the contract as not being performed within a year
from the time it was made, it was necessary for the plaintiff to show the con-
tract in writing. The only part of this contract which was in writing was
the telegram, which embraced only the consideration. The other essentials
of a contract were not contained in the telegram, for it cannot be determined
by the telegram whether Burt had in mind to employ the plaintiff as a dock
superintendent, watchman or any other employment. It is manifest that on these
matters the telegram settles nothing.

Judgment affirmed.

3.

Brown et al. v. Retsof Mining Company

111 N.Y.S. 59h; 127 App. Div. 368 (1903)

Edward W. Brown was hired as agent for the Retsof Mining Company on
the basis of the following letter from the Retsof Mining Company:

I desire to say that your relations as sales agents of the Retsof Mining
Company will continue under the same conditions as outlined in your contract
as long as you conduct the business in a manner satisfactory to the Retsof
Mining Company. In view of this fact, I do not deem it at all necessary
that any formal contract for a specified time be entered into.

The agent brought an action in the lower court alleging that he was
unjustly discharged; but the Retsof could discharge at any time he chose,
without obligation to explain or Justify its actions. In the trial Brown
went into extensive detail as to the fine service he had rendered. Retsof
now appeals from judgment for Brown.

Justice Hooker: The nature of the employment which gave the defendant
the absolute-right to terminate the relationship between himself and agent
was carefully investigated. The duties of the agent were many and diversified.

Yet regardless of the duties it is our contention tlat the language of
the contract couldrum have been plainer. There wes no limitation upon the
term"satisfactory". It is not important to consider whether the defendant
was actuated by some ulterior motive; it is immaterial whether the plaintiff,
through a long series of years, had worked up a profitable business.

The plaintiff voluntarily entered into this contract, whose legal ef-

fect they sould have known. We therefore reverse the judgment and a new

trial granted.

Barber—Greene Company v. Gould
109 30. 36h; 215 Ala. 73 (1926)
Frank E. Gould, an agent of the Barber-Greene Company, brought an ac-
tion for unpaid commissions on machinery sales. Two sales were involved.
The sale to J. A. Burt carried a clause that the sale would be complete up-

V

as approval of J. A. Burt. The sale to Crittenburg—Ozark Joint Project,

1+

on
on the other hand, was an outright and completed sale. The buyers in both
cases have returned the machines as unsatisfactory, and Gould seeks recovery

of commissions on the basis that he did the work in closing the sales and

that the return of the machines was really the fault of Barber—Greene. From

a judgment for the plaintiff, defendan appeals, still insisting that he should
not pay commission on Burt's deal, as that sale was never closed.

Justice Somerville: In cases of this sort between principal and agent
whereby the principal has discretion as to the acceptance of the agent‘s
orders, it seems to be the law that the agent's commission will not accrue
on rejected orders unless the principal has abused his discretion and acted
in bad faith in their rejection. Although this principle is not applicable
here.

Another principle, is that the terms of contracts of employment are fre-
quently such that the agents right to commission for negotiating a sale does
not accrue until and unless the purchaser pays the price, although the prin-
cipal cannot deprive the agent of his right to compensation under such a con-
tract by unreasonable means. It is also observed that as a rule the failure,
refusal or inability, of either principal or third person, to carry out the
contract does not defeat the agent's right to compensation.

Another principle which affects this case is that the principal is bound

-126

to the agent as well as the purchaser by his warranties and if through a breach
of the principal‘s warranties, the sale does not completely materialize, the
agent is still justified in receiving compensation for his work. This prin-
ciple is only effective when the contract is an unconditional sale.

The sale to Burt was not an unconditional sale and therefore the sales
commission on that sale is denied.

The sale to Joint Project was an unconditional sale and therefore the

sales commission on that sale is approved.

Gilbert Manufacturing Company v. Stroud and Company

287 F. 527 (1923)

Stroud and Company engaged the Gilbert Kanufacturing Company as its ex—
clusive sales agents in certain defined territory, with a provision that,
Stroud should nevertheless get their regular commission. Gilbert is now making
a counterclaim for commissions on repair parts which Stroud has sent into
Gilbert's territory. The main suit dealt with Stroud's demand that certain
machines be returned by Gilbert, and Gilbert is holding the machines until
they receive commission on the repair parts. In the lower court there was
a ver ict for Stroud on all points, and Gilbert appeals.

Justice Stone: The commission contract and the sales contract were
correlated. Each of them. by its terms, deals with graders and wagons and
them alone. In neither contract is there any reference to parts of or re-
pairs to graders and wagons.

Judgment affirmed.

-127-

Conclusion

In conclusion it is imperative to familiarize the reader with certain
generalities, or perhaps they should be called intangibles, that have had
and still do have, although in lesser degree, a marked effect upon the de-
cisions handed down by our courts.

In early American history the state constitutions did not in terms,
give to the courts the power of declaring acts of the legislature in vio-
lation of the restrictions of the bill of rights to be void, and it is con-
ceivable that it was intended that these restrictions should Operate merely
as directions to the legislature, and that the legislature would be the sole
judge of its compliance with the law. Although it was held within the next
few years that the highest court of the state could declare any statute, in
conflict with the express limitations of the bill of rights, unconstitutional,
the three fundamental canons of constitutional government were adOpted. rElie
two most important ones will be discussed.

The first important canon was that every presumption by the courts
should be made in favor of the validity of a statute. This was recognized
by the courts at the outset and this power was exceptionally pleasing to the
peOple, it made them feel that they were being protected against oppressive
and discriminatory legislation; they were proud of it. A short time later
because of the rise of problems of greater complexity the courts saw fit to
take it upon themselves to declare statutes unconstitutional upon mere tech-
nicalities. Inevitable consequences followed. The treatment of statutes by
this seemingly narrow and partman stand point by the courts lead to a reaction
of feeling among the peOple. A decision of a court declaring a statute un-

constitutional has, instead of being received with general approval often

-iv-

provoked public indignation, and aroused among superficial thinkers that the
courts have exceeded their power, and in so doing are curtailing the power
of the peeple themselves. Various remedies have been suggested, but as yet
none adOpted. The distrust and ill feeling which certain decisions upon
matters of constitutional law have created, have seriously threatened the
bulwark against governmental tyranny which only a short while ago was looked
upon with almost religious veneretion. In 1911 this feeling lead to the adep-
tion of a constitution in California which would permit greater freedom of
legislative enactment. One provision of this constitution if recognized in
its strictest sense, a man could be deprived of his prOperty without compen-
sation and even hanged without a trial.

The writer feels that a purely personal belief as to the vigorous atti-
tude of the courts to our legislative enactments, would not be inopportune.
It has been said that our courts thrive on dogmas, in fact our own President
Roosevelt mentioned the horse and bugs} days innumerably in connection with
the United States Supreme Court. President Roosevelt in attempting to elim-
inate conservative rulings and open the way for more social legislation, is
packing the supreme court bench.

One only has to read the court decisions for proof of the falsehood of
calling our tribunals dogmatic. The courts are invariably conservative of
the times and they serve to restrict the passion of the times by cool judg-
ment. Any of our present day courts would have been called liberal or radi-
cal twenty years ago. The courts are not called radical today, because the
people always remain one step ahead of them or what seems even more lorical,
the tribunals of our land remain one step behind her peOple. It is cf the ut-
most importance, that they refrain from immediately reflecting the Opinions

of the masses.

- v.

The second important canon which has an important effect upon the de-
cisions rendered by our courts, is that the constitution should be inter-
preted and enforced by an independent judiciary, the members of whiCh should
hold office during good behavior and should be subject neither to reward
nor punishment for their decisions.

As our state and federal judges were dependent upon pOpular vote of the
peOple, they were extremely cautious in rendering a decision against a land
owner in favor of the public, because the judge would incite in the land owner
and his friends a desire for revenge, and the public would perhaps not even
pay any attention to the case. If they did, it would only be to criticise
him for lack of human qualities.

This flaw in our judicial system has been somewhat alleviated by the ap-
pointment of our federal judges for life and the election of judges, byte
few states for a period of fourteen or twenty-one years. This will tend to
permit the judiciary body to issue a decision independent of public opinion
because of self preservation. Although it must not be disregarded that the
vast majority of our state judges are elected by popular vote for periods of

from four to seven years.

-vi-

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