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but the settlement in respect to which is to be upon the basis of the mere "difference" between the contract price and the market price of said cotton futures, according to the fluctuations in the market, was illegal and void under the statutes of New York and Virginia. And in most of the States there are statutes prescribing penalties for making such contracts (see, also, Booth v. Illinois, 184 U. S. 425).

In Frisbie v. United States (157 U. S. 160) it was held that the act of congress making it a misdemeanor for an attorney or other person prosecuting a claim for a pension to demand or receive a greater fee than ten dollars for his services, was not unconstitutional as an interference with the citizen's liberty of contract. The court says: "A second objection * * is that the act under which the indictment was found is unconstitutional because interfering with the price of labor and the freedom of contract. This objection is also untenable.

While it may be conceded that, generally speaking, among the inalienable rights of the citizen is that of the liberty of contract, yet such liberty is not absolute and universal. It is within the undoubted powers of government to restrain some individuals from all contracts, as well as all individuals from some contracts. It may deny to all the right to contract for the purchase or sale of lottery tickets; to the minor the right to assume any obligations, except for the necessaries of existence; to the common carrier the power to make any contract releasing himself from negligence, and, indeed, may restrain all engaged in any employment from any contract in the course of that employment which is against public policy. The possession of this power by government in no manner conflicts with the proposition that, generally speaking, every citizen has a right freely to contract for the price of his labor, services or property.

* *

bered that the fifth amendment is a limitation on the legislative power of congress.

In Holden v. Hardy (169 U. S. 366) it was held that a statute of Utah providing that "the period of employment of workingmen in all underground mines or workings shall be eight hours per day, except in cases of emergency, where life or property are in imminent danger," does not violate the provisions of the fourteenth amendment by abridging the privileges or immunities of its citizens, or by depriving them of their property, or by denying to them the equal protection of the laws. In this case the court cites, with approbation, the following from Chief Justice Shaw:

"Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations established by law as the legislature, under the governing and controlling power vested in them by the Constitution, may think necessary and expedient." And thereupon the court added: This power legitimately exercised can neither be limited by contract nor bartered away" (page 392). It is a matter that should be considered and well pondered over by the magnates of the coal combine," that in this same case the Supreme Court of the United States

says:

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The legislature has also recognized the fact, which the experience of legislators in many States has corroborated, that the proprietors of these establishments and their operatives do not stand upon an equality, and that their interests are, to a certain extent, conflicting. The former naturally desire to obtain as much labor as possible from their employes, while the latter are often induced by the fear of discharge to conform to regulations which their judgment, favorably exercised, would pronounce to be detrimental to their health or strength. In other words, the proprietors lay down the rules and the laborers are practically constrained to obey them. In such cases selfinterest is often an unsafe guide and the legislature may properly interpose its authority.

"It may not be improper to suggest in this connection that, although the prosecution in this case was against the employer of labor, who apparently, under the statute, is the only one liable, his defense is not so much that his right to contract has been infringed upon, but that the act works

"The pension granted by the government is a matter of bounty. * Congress, being at liberty to give or withhold a pension, may prescribe who shall receive it, and determine all the circumstances and conditions under which every application therefor shall be prosecuted. No man has a legal right to a pension, and no man has a legal right to interfere in the matter of obtaining pensions for himself or others. The whole control of that matter is within the domain of congressional power. Having power to legislate on this whole matter, to prescribe the conditions under a peculiar hardship to his employes, whose right which parties may assist in procuring pensions, it has the equal power to enforce by penal provisions compliance with its requirements. There can be no reasonable question of the constitutionality of this statute" (Pages 165, 166). It will be remem

to labor as long as they please is alleged to be thereby violated. The argument would certainly come with better grace and greater cogency from the latter class. But the fact that both parties are of full age and competent to contract does not

necessarily deprive the State of the power to interfere where the parties do not stand upon an equality, or where the public health demands that one party to the contract shall be protected against himself. The State still retains an interest in his welfare, however reckless he may be. The whole is no greater than the sum of all the parts and when the individual health, safety and welfare are sacrificed or neglected the State must suffer" (page 397).

In Knoxville Iron Company v. Harbison (183 U. S. 13) it was held that an act of the legislature of the State of Tennessee, requiring the redemption in cash of store orders or other evidences of indebtedness issued by employes in payment of wages due to employes, does not conflict with any provisions of the Constitution of the United States relating to contracts.

The court quotes extensively from the opinion of the State court sustaining the validity of this enactment, and thereupon adds: "The Supreme Court of Tennessee justified its conclusions by so full and satisfactory a reference to the decisions of this court as to render it unnecessary for us to travel over the same ground. It will be sufficient to briefly notice two or three of the latest cases: "In Holden v. Hardy (169 U. S. 366) the validity of an act of the State of Utah, regulating the employment of workingmen in underground mines and fixing the period of employment at eight hours per day, was in question. There, as here, it was contended that the legislation deprived the employers and employes of the right to make contracts in a lawful way and for lawful purposes; that it was class legislation and not equal or uniform in its provisions; that it deprived the parties of the equal protection of the laws, abridged the privileges and immunities of the defendant as a citizen of the United States and deprived him of his property and liberty without due process of law. But it was held, after full review of the previous cases, that the act in question was a valid exercise of the police power of the State, and the judgment of the Supreme Court of Utah sustaining the legislation was affirmed.

"Where a contract of insurance provided that the insurance company should not be liable beyond the actual cash value of the property at the time of its loss, and where a statute of the State of Missouri provided that in all suits brought upon policies of insurance against loss or damage by fire, the insurance company should not be permitted to deny that the property insured was worth at the time of issuing the policy the full amount of the insurance, this court held that it was competent for the legislature of Missouri to pass such a law. even though it places a limitation upon the

right of contract (Orient Insurance Company v. Daggs, 172 U. S. 557).

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In St. Louis, Iron Mountain, etc., Railway v. Paul (173 U. S. 404) a judgment of the Supreme Court of Arkansas, sustaining the validity of an act of the legislature of that State which provided that whenever any corporation or person engaged in operating a railroad should discharge, with or without cause, any employe or servant, the unpaid wages of any such servant then earned should become due and payable on the date of such discharge without abatement or deduction, was affirmed. It is true that stress was laid in the opinion in that case on the fact that, in the Constitution of the State the power to amend corporation charters was reserved to the State, and it is asserted that no such power exists in the present case. But it is also true that, inasmuch as the right to contract is not absolute in respect to every matter, but may be subjected to the restraints demanded by the safety and welfare of the State and its inhabitants, the police power of the State may, within defined limitations, extend over corporations outside of and regardless of the power to amend charters (Atchison, Topeka and Santa Fe Railroad v. Matthews, 174 U. S. 96). The judgment of the Supreme Court of Tennessee is affirmed" (183 U. S. pp. 21, 22).

In view of these decisions, the last one made at the last term of the Supreme Court, can there any longer be any reasonable doubt as to the constitutional power of the State of Pennsylvania to enact such legislation, even though it may interfere with the power, liberty or freedom of the corporations in the "coal combine" to extort from the miners contracts for their labor at less than a living wage?

It is well to remember the language of Chief Justice Fuller, quoted in another connection: "The right to contract is not absolute, but may be subjected to the restraint demanded by the safety and welfare of the State." Now the question arises: Does the peace and good order, the safety and welfare of the State of Pennsylvania and the inhabitants of the anthracite coal region demand such legislation?

The arbitrary course of action taken by the "coal combine" has brought this question before the people of Pennsylvania, and sooner or later the legislature of that State, either at a special or regular session, will answer it. In this country public opinion, putting on the robes of law and justice, is all powerful.

In view of the long train of evils following the present struggle between the mine operators and mine workers over the price of wages, would not the proposed legislation come strictly within the

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It is not because the sale, by itself, is wrong. But laws are made with a view to human nature and the way men are often inclined to act. Men ought not to become drunkards. They ought not to spend their earnings for drink - ought not to quit all work and allow their wives and children to come to want and destitution - ought not to fight and commit murder. But men who become drunkards often do some or all of these things. This train of evils, to the very end, follows far too often the sale, and especially the unlicensed sale, of intoxicating liquors. In order to prevent or lessen such evil consequences we have antisaloon and temperance laws interfering with the liberty or freedom of contract. The safety and welfare of the State and its inhabitants demand and justify the enactment of laws controlling the sale of intoxicating liquors.

So, in considering what would be proper legislation for the prevention or settlement of controversies between corporations and miners, the wise legislator will take into account human nature, as it is and has been for over a quarter of a century in the coal fields. The corporations own the mines and duly-qualified miners own the labor. They are dependent upon each other for their earnings. Unworked mines will remain subject to taxes, and idle miners will become subject to want and destitution. The corporations and miners differ as to the price of labor. The corporations refuse to give what the miners regard as only a reasonable living wage. The miners refuse to labor for less than that. The corporations and the miners have the utmost liberty or freedom of contract, just as the wine seller and the wine bibber have in the absence of all laws for controlling the sale of intoxicating liquors.

The corporations arbitrarily fix the price they will give for labor, and will not listen to proffers by the miners for compromise. The idle miners ought not to molest or use any violence toward other miners from any quarter. They ought not to insult or throw stones at the troops ordered to the mines by the State authorities on the demand of the corporations. Sooner than do either of these things the one hundred and forty-seven thousand miners of the anthracite region should go

back to work in the mines at the arbitrary prices fixed by the corporations or else abandon the benefit of all the special skill they have acquired in mining hard coal and go away with their families to other parts of the State or country. But some men at the risk of law and bayonets and sharpshooters will sooner steal food than starve to death. And as men of the brightest intellect when they become hard drinkers are led on step by step from the commission of one crime to that of another, so we find that a disagreement as to wages for mining coal leads to strikes, and strikes of any considerable duration are always followed by want and destitution, by mobs and murder.

In the language of the Supreme Court of Colorado (23 Col. 507): “While it is difficult to define the boundaries of the police power, it admittedly extends to the protection of the lives, health and property of the citizens and the preservation of good order and the public morals. We may properly take cognizance of the fact that the most serious disturbances which have occurred in this country for the last twenty-five years have grown out of controversies between employer and employe. No one doubts the authority or questions the duty of the State to interfere with such force as may be necessary to repress such disturbances and maintain the public peace and tranquility; and as well may the State provide in advance against certain kinds of fraud and oppression which leads to these outbreaks."

The mine operator has no moral right to extort from the mine worker his labor at less than a reasonable price. The mine operator in the "coal combine" of the anthracite region is strong, very strong, but "the strongest is never strong enough to be always master, unless he transforms his strength into right and obedience to duty." September 3, 1902.

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In these days of extensive reorganization, merger and consolidation of the great corporate interests of the country, the rights of a creditor of a corporation, whose entire property and franchises has passed from its hands to the ownership and control of another corporation, becomes a question of increasing importance and of frequent concern.

In the case of a consolidation of two or more corporations, where no provision is made by statute or by the arrangement of the constituent corporations, the latter practically going out of existence, the rule which seems to derive most support from the au

thorities, as well as from reason, is, that the con- of making payment in cash, the stock of the transsolidated corporation is answerable for all the debts feree corporation is issued, either to the selling of the constituent companies (1). In such cases, corporation or to the stockholders thereof in a judgment in personam may be recovered against amounts equal to their previous holdings, or prothe consolidated corporation for the debts of either portioned thereby. of the constituents; and all liens upon the property of such constituents are preserved and capable of being asserted against the consolidation (2).

But as to a reorganized corporation, the rule is different, it being quite generally held that the new corporation is not liable for the debts of the old corporation, unless it voluntarily assumes to pay such indebtedness or becomes liable by force of some statutory enactment (3). The assumption of such liability may be express or implied from the peculiar circumstances of the case (4).

In the absence of a specific grant of power so to do, neither the directors nor a majority of the stockholders of a corporation may, against the consent of any member thereof, dispose of the whole of the corporate property, where the corporation is a solvent and going concern (5). The stockholders of the corporation all agreeing upon such a course, however, it is as much within the power of the corporation to dispose of its whole property and franchises by a sale thereof, except in well-understood cases, as in the case of an individual, and the same limitations upon the right are imposed in behalf of creditors. In either case, the rule of justice before generosity prevails, and the rights of creditors receive similar protection.

The transaction not being tainted with fraud or dishonesty, and the payment of the price of the property transferred being made in cash, the case presents no difficulty, as the amount received must be applied at once to the payment of the corporate debts in the order of their priority, the amount remaining, if any, constituting a fund to be distributed among the stockholders.

In any event, the demands of corporate creditors must be satisfied before a distribution of the assets is made among stockholders. Otherwise, a distribution would be a conversion, and this usually, by statute, is an act which makes stockholders personally liable for corporate debts, in addition to the right of the creditor of compelling a return of the stock, and subjecting it to the payment of his demands. The transaction being a fair one, the value of the stock received by the selling corporation approximating the reasonable value of the property disposed of, the creditor merely subjects the stock received to the satisfaction of his debt. This is the most common as well as the most practicable remedy; but it is not the only one if the selling corporation is insolvent. In such case, even if the transfer is made upon a valuable consideration and no fraud is, in fact, intended the property made be followed into the hands of the transferee or its assignees, unless a purchaser for value and without notice, and attached by the creditors. For, by the very act of transferring its whole property, the selling corporation has, for a time at least, placed its property beyond reach of its creditors, in fraud of their rights as such (6).

It is too frequently true that the transaction between the two corporations is not an honest one, but a fraudulent scheme devised for the spoilation of the rights of the creditors of the selling corporation. In many cases the transferee is a mere "dummy," consisting principally of the stockholders of the old corporation, or of others acting for them, and organized solely for the purpose of receiving such a transfer. It is well settled that an in

But usually a different method is pursued. Instead solvent corporation cannot transfer its property to

(1) Thompson v. Abbott, 61 Mo., 176; Mt. Pleasant v. Beckwith, 100 U. S., 514; Pullman Car Co. v. Missouri Pacific Co., 115 U. S., 587; Louisville, etc., R. Co. v. Boney, 117 Ind., 501; Columbus, etc., R. Co. V. Powell, 40 Ind., 37; State v. Baltimore, etc., R. Co., 77 Md., 489; Coggin v. Central R. Co., 62 Ga., 685; Chicago, etc., R. Co. v. Moffett, 75 Ill., 524; 7 Thompson on Corp., sec. 8241; 2 Spelling on Priv. Corp., sec. 721; 2 Morawetz on Priv. Corp. (2d ed), secs. 809, 954-957; Elliott on Priv. Corp. (3d ed.), sec. 198; 2 Clark & Marshall on Priv. Corp., secs. 357-358; 3 Cook on Corp.,

sec. 897.

(2) Central Railroad & Banking Co. v. Georgia, 92 U. S., 665; Mississippi Valley R. Co. v. Chicago, etc., R. Co., 58 Miss., 846; Rutten v. Union Pacific R. Co.,

17 Fed., 480; see, also, cases cited in note 1.

(3) Fernschild v. Yuengling, etc., Co., 154 N. Y., 667; Ewing v. Composite, etc., Co., 169 Mass., 72; 2 Cook on Corp. (4th ed.), sec. 673; 7 Thompson on Corp.,

sec. 8275; 2 Morawetz on Priv. Corp. (2d ed.), sec. 811; 2 Clark & Marshall on Priv. Corp., sec. 342.

(4) Reed Bros. Co. v. First National Bank of Weeping Water, 46 Neb., 168.

(5) 2 Cook on Stock and Stockholders and Corp. Law, sec. 667, collecting cases in note 1, at page 955.

another in fraud of the rights of corporate creditors, and that it cannot, for such purpose, under the form of law, reorganize and hold its property against them and without their consent (7).

As a general rule, the creditor of a debtor who has fraudulently conveyed away his property, must bring his action immediately against his debtor and reduce his claim to judgment. An execution thereon remaining unsatisfied, he may sue in equity to set aside the fraudulent transfer and subject the property fraudulently conveyed to the satisfaction of his judgment, unless, of course, the rights of an innocent purchaser intervene (8). But this does not always constitute the sole remedy. An exception, or, it may be added, an addition, thereto, has arisen in that class of cases in which the new corporation is made up wholly or substantially of the

(6) McVicker v. American Opera Co., 40 Fed., 861. (7) See cases cited infra.

(8) Bump on Fraudulent Conveyances, 522; 3 Pomeroy's Equity Jur., sec. 1415.

members of the old corporation. In such a case, the same, and that the new must respond to the the transaction not being bona fide, the creditor may proceed at once and primarily against the new or reorganized corporation, and hold it liable for the debts of the old, at least, to the extent of the property which it has so fraudulently received.

wherein mere colorable pretenses are to be disregarded. Shifting of corporate names cannot defeat positive rights, any more than the change of the name of a natural person can absolve him from his personal obligations.

obligations of the old. The evidence is clear enough that there was a hidden purpose in the change of corporate existence to escape possible liabilities which equity does not tolerate. A mere change of name cannot avoid obligations. The This exception seems to have been first recognized new corporation took all the property of the old, and applied in the case of Hibernia Insurance Co. went forward with its business, had the same stockv. St. Louis & New Orleans Transportation Co. holders, except a few formal ones; was, in short, (10 Fed. 596). The facts in that case were as fol- the old corporation, and now seeks to avoid the lows: The Baggage Transportation Co. became in- obligations of the old, rescuing the property of the debted to the plaintiff as subrogee. Before judg- latter from the demands the former was bound to ment had been obtained upon such indebtedness, meet. Can this be done? The old corporation and the Transportation Company transferred to the its property were liable to the demands of the plaintdefendant, the St. Louis Company, all of its prop- iff. The new corporation must respond to the exerty, no provision in the transfer being made for tent of the property acquired, and possibly to the the debt of the plaintiff, the president and principal full extent; that is, if property sufficient therefor stockholder of the Transportation Company actively is in its possession. This is a proceeding in equity bringing about such transfer. Both the corporations were made defendants and the prayer was for a decree as for a moneyed judgment against both defendants. The court upon demurrer held the suit properly brought and in affirming the liability of the St. Louis Company to the extent of the "The evidence discloses that the obligations of property received, said: "A corporation having in- the Baggage Company still subsist against its corcurred liabilities, is dissolved practically by trans-porate successor; at least, to the extent of the ferring all its property to another corporation assets acquired." formed possibly for the very purpose of leaving the The same principle was recognized in the cases creditors of the former (creditors at large) without any adequate means of realizing their just dues. There is too much of this, as judicial experience has shown. The change of organization is too often a mere change of name, designed solely to defeat the rights of creditors. The corporation has one name to-day, and to escape its liabilities, goes through the form of a new organization and takes a new corporate name, with a transfer of all the This question seems next to have arisen distinctly assets of the old corporation. Should that contriv- in Blanc v. Paymaster Mining Company (95 Cal. ance succeed? Should not a court of equity hold 524), a case in which an insolvent corporation had the new answerable for the debts of the old to the made an assignment of all its property to its managextent of assets received? * * * If the new cor- ing officer for the purpose of paying the debts of the poration knew, as charged, that the demands corporation. The assignee made a pretended public against the old were outstanding, and with that sale of the property, at which he was the purchaser knowledge received all the property of the old corat a merely nominal sum, subsequent to which he, poration without consideration, why should it not with the other officers and stockholders of the debe held to have acquired that property cum onere?" funct corporation, proceeded to organize the defendUpon a subsequent trial of the same cause ant (appellee) corporation, and turned over to it (Hibernia Insurance Co. v. St. Louis & New Orleans all of the property of the old corporation frauduTransportation Co. [13 Fed. 516, 520-521]) Treat, lently purchased by him. No valid judgment had D. J., in his concurring opinion, again said: “It is been recovered by appellant against the old corporathe duty of the court to examine the whole transac- tion; and neither was it made a party to this suit, tion, and to cut through mere paper transfers de- the new corporation being alone made defendant signed to obstruct or destroy the rights of parties. in the proceeding to recover a debt owing from the The evidence sufficiently discloses that the new cor- old corporation. It was insisted that the creditor poration was a mere continuance of the old, with must first have recovered judgment against his substantially the same parties in interest - a mere debtor, the old corporation, and execution thereon change of name. Whether that change, with attend- be unsatisfied before he is entitled to resort to an ant transfers, was designed or not to defeat all equitable action to reach property fraudulently outstanding demands of the old corporation, it is transferred by his debtor; but the court held that evident that substantially the two corporations are it was not necessary that the appellant should have

of Hancock v. Holbrook (40 La. Ann. 53) and Montgomery Web Co. v. Dienelt et al. (133 Pa. St. 583), in both of which it was held that the rights of creditors may not be defeated by the stockholders of the old corporation forming a new one and taking over the property of the old, the new corporation being liable for the debts of the old to the extent of the property received.

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