Page:Harvard Law Review Volume 10.djvu/478

452 452 HARVARD LAW REVIEW. Contracts — vStatute of Frauds. — Held, that a verbal contract to maintain a switch for plaintiff's benefit for shipping purposes, "so long as he may need it," is not within the Statute of Frauds as being an "agreement not to be performed within the space of one year from the making thereof." Warner v. Texas <Sr» P. R. R. Co., 17 Sup. Ct. Rep.' 147. It seems rather strange that this point has not been definitely settled in the Supreme Court before, when the law in England appears to have been so since the time of Lord Holt. Peter v. Compton, Skin. 353. The general rule appears to be, that where the contract is such that the whole may be performed within a year, and there is no express stipulation to the contrary, the statute does not apply. McGregor v. McGregor, 21 Q. B. D. 424. But a contract for a term specified of more than a year, determinable by notice within a year, is held to come within the rule. Birch v. Liverpool, 9 B. & C. 392. As the question is so largely one of construction, it may naturally be expected that the various states have not adopted a uniform rule. How- ever, the cases collected in Browne, Stat, of Frauds, § 272 et seq., show a marked tend- ency to follow the English doctrine. The question is whether the contract, according to the reasonable interpretation of its terms, requires that it should not be performed withiji a year. Contracts — Usury — Liability terminated by Borrower's Death. — The defendant borrowed money of the plaintiff to be repaid in monthly instalments, but in case of the defendant's death the unpaid portion to be released. At the same time the plaintiff obtained from an insurance company a policy on defendant's life, which fully indemnified him from any possibility of loss in case of defendant's death before full payment. The amount to be paid by the defendant was largely in excess of the principal of the loan, with the highest interest allowed by law and the cost of the insurance paid for by the plaintiff. Held, that the contract was void, as a cover for usury. Kansas 6^ Texas Trust Co. v. Krumseig, 77 Fed. Rep. 32. This case is interesting as an illustration of the futile subterfuges resorted to by certain lenders in their attempts to evade the usury statutes. The plaintiffs contended that, as the defendant would be relieved of payments in case of death, there could be no question of usury. But the court rightly held that the contingency was a flimsy pretext. The real meaning of the contract was, that the borrower was to pay at a usurious rate if he lived, and if he died the lenders were to be indemnified by insurance nominally paid for by them, but in reality by the funds illegally secured from the borrower. The courts will not suffer the statute to be evaded by a mere colorable device. Corporations — Liability of Counties for Defects in Highways. — j%A/, that a county is not liable for injury to land where a bridge erected by the county was built so negligently as to cause a stream to change its course. Davies v. Ada County ^ 47 Pac. Rep. 93 (Idaho). The weight of authority is, that, while cities may be held liable for damages arising from negligence in the maintenance of pubhc ways, counties are exempt. The reason for the distinction is not clear. Cities, to be sure, partake of the nature of private cor- porations, and are often liable as such ; but they are ordinarily not liable in the exer- cise of governmental functions. It is because a county exercises purely governmental functions that it escapes liability, and when a city engages in exactly the same work it should be exempt for the same reasons. The alternative would seem to be to make both liable. 2 Dillon, Munic. Corp., 4th ed., § 998. Corporations. — Unconstitutional Enabling Act. — By qtto warranto pro- ceedings, a general statute for the formation of boroughs was declared unconstitutional. Held, nevertheless, that a borough already incorporated under this statute could con- tinue to act as a de facto corporation until direct proceedings were taken against it. Coast Co. V. Spring Lake, 36 Atl. Rep. 21 (N. J.). To enable a corporation to exist de facto, there must be a bona fide attempt to organize under an existing law, and so it is still an open question whether such a corporation can be organized under an invalid one. From the practical standpoint, the difficulty of determining the question of constitutionality, and the confusion occasioned by unsettling business transactions entered into bona fide, afford a strong argument for admitting its de facto existence. Such reasoning has prevailed in the. New Jersey court, buteven so the basis of this doctrine is the mistake of the parties. Acts which were never authorized are allowed to stand because it was supposed that the authority had been given. According to the principal case no incorporation would be valid if attempted with knowledge of the qiio warranto proceedings of the Attorney General, for the courts do not wish to encourage acts which are known to be forbidden by the Constitution of the State. This same reasoning would seem to apply equally to