NOTES OF IMPORTANT DECISIONS.

CORPORATION-DEPLETION OF ASSETS BY FORBIDDEN PRACTICES SO FAR AS SUBSEQUENT CREDITORS ARE CONCERNED.-Jesson v. Noyes, 245 Fed. 46, decided by Ninth Circuit Court of Appeals, holds in a suit against directors of a corporation which was forbidden by statute to pay dividends not earned or purchase its own stock, that their liability not only was to existing but subsequent creditors.

The court referred to contention of counsel as being sustained by Atlanta, etc., Assn. v. Smith, 141 Wis. 377, 132 L. R. A. (N. S.) 137, 135 Am. St. Rep. 42, but it says this was because the trust fund doctrine does not under all circumstances there apply and that "as a general rule, unless plainly prohibited by statute or its organic act, a corporation may buy its own stock using its assets therefor, so long as it acts in good faith, pursuant to authorization of its governing body, and that this is true both as to past and future creditors." Then it is stated that the statute governing this corporation expressly forbade such.

Cases are referred to to the effect that if such practices result in immediate insolvency the fact of liability of directors to future creditors is clear, but not so if this does not immediately result.

The court also refers to the case above cited as stating a more far-reaching principle. That case says: "We are not unmindful that the rule, in general, as to avoidance of a transfer of property in fraud for future creditors, applies only in cases of actual intent to defraud them. *** It is too restrictive, as generally stated, to the situation here, and should it in thought, be extended to include it, upon the theory, that the duty of the stockholders not to deplete for their own advantage corporate assets below the subscribed capital, and become a party to a continuance of solvent appearance, supplies the nced for actual intent to defraud, where the natural and probable effect is to prej. udice persons subsequently dealing with the corporation as solvent."

It seems to us, the rule ought to go further than this. If a corporation's subscribed capital is behind its capital at all, it is so utterly. The very fact that it may not reduce its general capital without special authority carries the idea, that it shall not do this indirectly by releasing any stockholder's share in that capitalization. It matters not whether a release affects its solvent appearance or not. If ulti

mately it does this, this is harmful, if creditors rely on capitalization. If the stock may not advantageously be disposed of in market overt, that is a reason for its not being bought by the corporation. If the corporation wishes to reduce its stock, the same publicity should be given to that fact as is given to original subscription. And before any corporation may reduce its capitalization, there ought to be given opportunity to object by any one interested, or that may be interested.

LANDLORD AND TENANT

LIABILITY OF LANDLORD LEASING LAKE FOR BATHING PURPOSES.-In Bearman v. Grooms, 197 S. W. 1090, decided by Supreme Court of Tennessee, it was held, that where a lake to be used for public bathing purposes was of treach erous and uneven depths, so that it only could be used with reasonable safety by placing ropes between stakes at convenient intervals. and lessee agreed to maintain and to plant posts, maintain guards and boats and take all necessary precautions to make safe the busi ness of a lake for public bathing purposes. the landlord did not become liable for the drowning of a patron, who came into a sharp decline in the bottom, the duty of maintaining the lake in safety being solely on the lessee.

The court said: "The construction of additional appliances or equipment, such as warn ing signs or guard ropes, required to make the premises suitable and safe for use, being that of the tenant, and any negligence that resulted in their maintenance being also his, the pending case is to be differentiated from those of another class where the manner of construc tion by the lessor and the tenant's negligence both contribute to the injury of a third person."

We think the error in this view is in not differentiating between conduct of business by the lessee and the leasing to him of unsafe premises.

It is premised by the court that there is a stringent liability in the management of the lake in question for the purpose intended and in holding it out to be used therefor. Now, if the landlord knew there were dangerous depths, hidden from users of the lake, it could not be leased except as a dangerous place. If statute, for example, required guard ropes to be used and posts planted to which they were to be tied, no promise by a lessee to see to this would excuse the lessor. To maintain these things is not an act in the course of conduct of the business. We doubt very greatly that there legally exists the distinction of which the court speaks.

METHODS OF SELECTING JUDGES.

Most people in this country, who think about the subject at all, suppose that there are only two methods of selecting judges -by appointment and by election. This is a fundamental error that we must avoid

in limini. There is, speaking generally, only one method of selecting judges and that is by appointment. There are, of course, different kinds of appointment, as we shall see, but except, perhaps, in the most primitive frontier communities, there is no such thing as the selection of judges by the people. In metropolitan districts I venture to say that such a method of selection not only does not exist, but cannot by any possibility exist. It is one of our most absurd bits of political hypocrisy that we actually talk and act as if our judges were elected by

the people whenever the method of selection is in form by popular election.

In a great metropolitan district like Chicago, for instance, where we have a typical long ballot and the party machines are well organized and powerful, our judges, while they go through the form of election, are not selected by the people at all. They are appointed. The appointing power is The appointing power is lodged with the leaders of the party machines. These men appoint the nominees. They did it openly and with a certain degree of responsibility under the convention system. They do it now less openly and with less responsibility under our compulsory and partisan primary system.

Even outside of such metropolitan districts as Chicago, if party organizations are strong and well led, and the form of elections aid these party organizations, the same process of appointment will be found to prevail, although owing to the smaller sized electorate the confirming of the appointees by the people may be somewhat more intelligent.

In Wisconsin,1 where they are proud of and satisfied with their so-called elective system of judges, I venture to say that the method of selecting will be found to be ninety per cent appointment and ten per cent election. A strong tradition has been built up in Wisconsin of re-electing sitting judges. This means, and the actual fact is, that vacancies on the bench occur almost wholly by death or resignation of the incumbent. When this happens the bar (and that means the leaders among the bar) at once set about to fill the office. The qualifications of various lawyers are discussed in a semi-public manner. There is sufficient decorum so that candidates do not come forward personally to advance their claims. A bar primary is then held, all the candidates having a fair chance. The bar, as a whole, accepts the result and regardless of party, supports the winner. The actual power of

appointment for the unexpired term rests

with the governor.

He, however, is ex

pected to, and customarily does in fact, appoint the man recommended by the bar. When election day comes around the judge so appointed is supported by the bar regardless of party, because he was originally the nominee of the bar and because he is a sitting judge. He is regularly thereafter supported at elections until he dies or resigns. So strong is the tradition and feeling in favor of electing and re-electing judges who have been appointed originally in the manner described, that sitting judges will prevail even against candidates who are admittedly abler lawyers. The system of retaining judges in office during good behavior has been found by the people of Wisconsin to be worth more than the replacement once in a while of a satisfactory man with one who might and who probably would do better. Whatever pride there may be in such. a system of selecting judges, it is a pride in the way a so-called plan of popular elec

(1) For this account of the way the election of judges works out in Wisconsin, I am indebted to Herbert Harley, Esq., Secretary of the American Judicature Society.

tion has been developed into an appointment by the leading lawyers of the district with the concurrence of the governor. In the largest metropolitan district of Wisconsin however, the lawyers are having harder work to keep in their own hands the power of appointing judges and to prevent that power from passing to the leaders of the political organizations which fill the general run of offices in the district.

A proper analysis of our experience not only shows that there is practically no such thing as the selection of judges by the people, but also that such a mode of selection is (particularly in our larger metropolitan districts) impossible. The plain truth is The plain truth is that in a metropolitan district, and to a considerable degree outside, the selection of judges by some sort of appointing power cannot be avoided. It is obviously impossible for an electorate of any size, or even for different parts of such an electorate, to have any collective idea of those among the lawyers whom it wishes to act as judges. It is even more clear that the electorate can have no collective idea of the qualifications of different lawyers for exercising the judicial function. It would be a problem for a single individual who had an extensive personal knowledge of lawyers and who observed them closely for a considerable period in the practice of their profession.

We have gotten past thinking that any lawyer can be a judge. In metropolitan centers particularly, we have come to the view that to be a successful and efficient judge a highly trained professional expert is required. He must not only be well educated, but he must have the training and character which comes from years of practice in the courts. The electorate would not think of undertaking to select at a general election the engineer who is to design a bridge upon which thousands of the population each day must pass in safety. It is quite as absurd for the electorate to attempt a selection of the very special talents which are required in a judge in passing upon the rights to life, liberty and property of thou

sands of citizens. Furthermore, lawyers who are willing to become candidates for judgeships have as a general rule no real popular following among an electorate of any size. Few judges, after they have been on the bench, have any such real popular following that they can be said to be a popular choice. The position of a single judge in a district containing one hundred thousand voters and upward is ordinarily too hidden and obscure to enable any man who is willing to occupy the place to secure a popular following. A lawyer or a judge, who secures a real hold upon the majority of a numerous electorate, will inevitably be led to a candidacy for office of greater political importance than a judgeship. These are some of the reasons why the selection of judges by the people is a practical impossibility. For all but the most exceptional judge, particularly in metropolitan districts, the power which places him in office will be an appointing power, although there be in force the so-called popular election of judges.

There are many who sincerely believe that the electorate can choose its judges, provided they are elected only at special elections, where a judicial ballot is used which omits all designation of parties and upon which the names of candidates are placed by petition only and the name of each candidate is rotated upon the ballot so that it will appear an equal number of times in every position. The object of such legislation is to restore a choice by the electorate by depriving the party organizations of predominant influence in judicial elections. The means adopted to deprive the party of its influence is to take from it the use of the party circle and the party column. It may safely be predicted of such legislation that it will not cause judges to be the actual choice of the electorate, nor will it eliminate the influence of the party leaders in judicial elections.

The supposition is that if the influence of the party leaders can be eliminated, the electorate will necessarily make a real