Page:Harvard Law Review Volume 10.djvu/273

247 RECENT CASES, 247 of the best text writers, both in this country and in England, agrees with the results reached by the court. Jacob's Law of Domicil, § 133 ; Dicey's Conflict of Laws, 91-93. Constitutional Law — Impairment of Obligation of Contracts. — A Rhode Island statute authorized any town to construct waterworks for the use of the town, and also contract with third parties for a water supply. The town of Westerly granted this right of constructing waterworks and supplying the town with water to the plaintiff, a corporation organized for such purpose. After the plaintiff had complied with all the requirements of the grant, the town passed a vote for the construction by itself of a waterworks plant. The plaintiff filed a bill to restrain the town from carry- ing out its vote. Held, that this action of the town, being taken under a State statute, was in effect action by the State. As such it was opposed to the provisions of the constitution of the United States, being a law impairing the obligation of the previous contract with the plaintiff. Plaintiff was consequently entitled to his injunction. Westerly Waterworks v. Town of Westerly, 75 Fed. Rep. 181. This decision seems questionable, to say the least. The only positive act of the State legislature in reference to the question was passed previously to the town's con- tract with the plaintiff. For a State law to impair the obligation of a contract, it must be passed subsequently to the formation of such contract. {Lehigh Water Co. v. Easton, 121 U. S. 388.) And it is hard to see how a vote of a town under authority of a State statute can be considered a law of the State. It may be that the town is liable to the plaintiff for breach of contract ; that would depend on the terms of the contract ; but that is a very different matter from saying that a vote of a town can be a State law under the provisions of the Federal Constitution. Corporations — Building and Loan Associations — Usury. — Under the usual statute allowing building and loan associations to make loans to members, it was provided that premiums paid for right of precedence in taking loans, although in excess of legal interest, should not be considered as making the loan usurious. Held, that the interest might be reserved at the highest rate permitted by law on the face of the note, although the premium was deducted from that amount and the difference only paid to the borrower. Association v. Drmnmond, 68 N. W. Rep. 375 (Neb.). Looked at as a loan for the face of the note, out of which the borrower immediately pays the premium, there can be no logical objection to this decision, as in this case interest on the face of the note is merely interest on the actual loan. Association v. Webster, 25 Barb. 263. Or it may be considered a loan for the face of a note which is made up of two sums: first, an amount equal to the difference between the face of the note and the premium; secondly, an amount equal to the premium, which it is not necessary for the borrower to turn over to the association, as it would be immediately paid back to him. Bowen v. Association, 28 Atl. Rep. 67 (N. J.). But see, contra to the principal case, Association v. Gallagher, 25 Ohio St. 208, and Association v. Blackburn, 48 Iowa, 385, which seem to go on the ground that exceptions to usury laws accorded to building and loan associations should be strictly construed, — that the interest should be computed on the money actually loaned, and not on the sum bid for. Corporations— Reorganization — Liability of Old Corporation for Debts of Nkw. — A mining corporation being in debt, its stockholders organized another company, which leased the property of the first and paid off all its existing debts. The same men controlled both companies at all times. Held, a mechanic's lien for work and materials furnished the new company could be enforced against the old company, the lessor of the premises. Hatcher v. United Leasing Co., 75 Fed. Rep. 368. The case proceeds on the ground that as to all outside parties there is no change of title, and the old company cannot escape from any liability by its fictitious lease to itself under another name. The case usually arises on an attempt to hold the new cor- poration for the liabilities of the old one, and the question then is, whether the new company is a revival of the old or a new and distinct creation, for in the latter case no liability attaches to the new company. In such cases the test is the legislative intent in conferring the new charter, i Thomp. Corp. § 256. But in the principal case there would seem to be no doubt as to the separate character of the two measured by this test, — the new one being chartered to lease the property of the old is a clear legislative recognition of their individuality. Though the grounds of the decisions seem at least doubtful, the case may well be supported as one of those where, by reason of the interest the lessor has in the improvements, the reversion is subject to the mechanic's lien. Burkitt v. Harper, 21 N. Y. Sup. Ct. 581 ; Moore. Jackson, 49 Cal. 109. Corporations — Right to prefer Creditors. — Held,ih2it when a corporation has ceased to carry on business and is insolvent, the directors have no right to pav some creditors in preference to others. Allison v. The Bradt Printing Co.y yj S. W. Rep. 10 (Tenn.). 33