case altogether the fact that the defendant had covenanted to repair. 21

The cases thus far considered were those in which the landlord either retained possession of the whole or part of the premises, or where he took possession temporarily for the purpose of making repairs or alterations. The law goes yet further and imposes a liability where he releases the entire possession to the tenant and does not re-enter, but the premises were in a defective or dangerous condition when leased; this fact being known to the lessor, and not known to nor reasonably discoverable by the lessee, and the former conceals the true condition from the latter. Whether there is active misrepresentation or fraudulent concealment, the liability equally results. The rule has most frequently been applied to defects in portions of the premises which the tenant would not be likely to and did not discover ;to cases of defective sidewalks ; 2 2 vaults, 2a and cess-pools.24 The theory upon which these decisions proceed is that while no responsibility arises out of a contract express or implied, there is a strict common law liability for a tort, in using the property in a harmful way; and an application is made of the maxim sic utere tuo ut alienum non laedas. 2 5 A clear statement of the rule is found in a recent Kansas decision where the landlord was held liable for injuries sustained by the lessee's wife who fell through the defective covering of a well. The court say: "The owner of premises upon which is situated a structure or building dangerous either by reason of defective construction or from long use, of which the owner has knowledge or which defect is not obvious or discoverable by the exercise of ordinary care, cannot escape liability to a tenant from whom he conceals such defect or a member of his family, who, not knowing of such defect, and while in the exercise of ordinary care, is injured by the falling of such building or structure."26

21 Barman v. Spencer (Ind.), 44 L. R. A. 815, 49 N. E. Rep. 9.1

22 Leydecker v. Brintnall, 158 Mass. 292, 33 N. E. Rep. 399.

23 Cake v. Gutkese, 80 Ky. 598; Martin v. Richards, 155 Mass. 381, 29 N. E. Rep. 591.

24 Cowen v. Sunderland, 145 Mass. 363, 14 N. E. Rep. 117; Kern v. Myll, 80 Mich. 525, 8 L. R. A. 682, 45 N. W. Kep. 587.

25 Kern v. Myll, 80 Mich. 525, 8 L. R. A. 682, 45 N. W. Rep. 587.

26 Moore v. Parker, 63 Kas. 52 53 L. R. A. 778. (Kas.), 33 Cent. L. J. 246.

The same doctrine is invoked where the premises are infected with a contagious disease and the landlord conceals the fact.27 So rigidly has this rule been enforced that where the premises were not defective when first rented, but became so during the tenancy, and the landlord re-let them from year to year, he was held liable to a stranger, if at the commencement of any year for which the property was rented there were dangerous defects therein. 28 Whether the lessor would be liable under these circumstances to the tenant would depend upon whether the defect were one known to, or discoverable by, the tenant at the time of renewing the lease, and whether the landlord had actual or constructive notice of its existence at that time. no case, however, would a covenant by the tenant to repair, operate to release the landlord from responsibility to third persons, if he would have been liable in the absence of such covenant.29

In

Considerable discussion has arisen whether the landlord must actually know of the defects and dangerous conditions existing when he leases the premises, or if his failure to make reasonable inspection of them will charge him with responsibility for such conditions discoverable by due diligence. The better rule is, that his knowledge may be actual or constructive; and the latter arises where he neglects to make reasonable investigation. Such was the decision in the carefully considered case of Hines v. Wilcox.30 In a subsequent affirmance of this decision it was said: "It is strenuously insisted that no active duty devolves upon the landlord to ascertain such hidden defects and dangers, and in the absence of actual knowledge the landlord will not be liable for any damages. The logic of this proposition is, that a landlord is under no obligation to know anything about the condition of his premises, whether they are dangerous or safe, whether habitable or a nuisance, and so long as he keeps himself ignorant either intentionally or negligently,

27 Minor v. Sharon, 112 Mass. 477; Gesar v, Karutz, 60 N. Y. 229.

28 Matthews v. De Groff, 43 N. Y. Supp. 237. 29 Matthews v. De Groff, 43 N. Y. Supp. 237. 30 Hines v. Wilcox, 96 Tenn. 148, 33 S. W. Rep. 914, 34 L. R. A. 824. Affirmed in Wilcox v. Hines, 41 L. R. A. 278, 34 S. W. Rep. 420, 96 Tenn. 328, and Sternberg v. Wilcox, 96 Tenn. 163, 34 L. R. A. 615, 33 S.W.Rep. 917, 34 S.W.Rep. 420 See Cent. L.!J. 388.

and who has no control over them, who would not have the right to enter therein even to make repairs without his tenant's consent, is not liable for accidents occasioned by the fact that the property is temporarily out of repair. "45 If the lessor has no notice of the defective or dangerous conditions existing upon his premises, and is not chargeable with negligence in failing to discover them at the time of leasing, he is not liable for injuries to the tenant or to strangers; for it is well settled that he is not an insurer and unless he has real or legal notice of the danger, he cannot be said to fail in the discharge of any duty. Finally, if it appears that the injury was the result of the act of the tenant or of a stranger, the landlord is held exempt from responsibility; for the tenant is not his agent, nor can the lessor be deemed to authorize or anticipate the independent acts of third parties. 47

46

Indianapolis, Ind.

HENRY M. DOWLING.

45 Shindlebeck v. Moon, 32 Ohio St. 264.

46 Schmalzried v. White, 97 Tenn. 36, 36 S. W. Rep 393, 32 L. R. A. 782, (Tenn.); Idell v. Mitchell, 158 N. Y. 134, 52 N. E. Rep. 740; State v. Boyce, 73 Md. 469, 21 Atl. Rep. 327; Aherne v. Steele, 115 N. Y. 203, 5 L R. A. 449.

47 Texas Loan Agency v. Fleming, 44 L. R. A. 279, (Tex.), 92 Tex. 458, 49 S. W. Rep. 1039; White v. Montgomery, 58 Ga. 204, damage from water closet; Kalis v. Shattuck, 69 Cal. 593, 11 Pac. Rep. 346; Handyside v. Powers, 145 Mass. 123, 128, 13 N. E. Rep. 462, injury from elevator shaft; Mellen v. Morrill, 126 Mass. 545, unguarded excavation; Allen v. Smith, 76 Me. 335, overflowing waterworks; McCarthy v. York Bank, 74 Me. 315, overflowing waterworks; Stewart v. Putman, 127 Mass. 402, coal hole; Adams v. Fletcher, 17 R. I. 137, 20 Atl. Rep. 263, coal hole; Edwards v. N. Y. R. R. Co., 98 N. Y. 256, strangers breaking down gallery by stamping.

CONSTITUTIONAL LAW-RIGHT OF STATE TO INVALIDATE SALE OF STOCKS ON MARGIN.

OTIS & GASSMAN v. PARKER.

Supreme Court of the United States, January 5, 1903. 1. No unconstitutional interference with the right of contract is made by Cal. Const. art. 4, § 26, avoiding all contracts for sales of shares of corporate stock on margin, and providing for the recovery of any money paid on such contracts, although this provision may be construed to apply to bona fide as well as gambling contracts.

2. The equal protection of the laws is not denied by Cal. Const. art. 4, § 26, avoiding all contracts for the sale of shares of corporate stock on margin, because this provision strikes only at some, and not all, objects of possible speculation.

HOLMES, J.: This is an action in three counts, for money had and received, for money paid and

promised to be repaid, and for margins paid to the defendants as stock brokers on contracts to buy and sell mining stocks, respectively. The answers to the first two counts are general denials and other matters now immaterial. The answer to the third count, beside a general denial, sets up that the count is based upon a provision in article 4, § 26, of the constitution of California, and that that provision is contrary to the 1st section of the 14th amendment of the constitution of the United States. It appears by the record that the only cause of action was that stated specifically in the third count, and that the defendants interposed the constitutional objection at the trial, and that it was overruled. The plaintiff had a general verdict on all three counts. The case was taken from the superior to the Supreme Court of California on appeal, and the judgment of the superior court was affirmed, with an immaterial modification. It now is brought here by a writ of error to the supreme court of the state.

We must take it as established that the plaintiff did enter into transactions prohibited by the constitution of California, and that he had a right to his judgment under that constitution if the clause relied upon is not contrary to the constitution of the United States. There is no question that the parties were subject to the provisions of the latter constitution, and no doubt that the question whether it invalidated the state constitution necessarily was passed upon, and was answered in the negative by the state court. 130 Cal. 322, 62 Pac. Rep. 571, 927.

The provision of the state constitution is as follows: "All contracts for the sales of shares of the capital stock of any corporation or association, on margin, or to be delivered at a future day, shall be void, and any money paid on such contracts may be recovered by the party paying it by suit in any court of competent jurisdiction." There was some suggestion that these words might be narrowed by construction to contracts not contemplating a bona fide acquisition of the stock, but intended to cover only a wager or contemplated settlement of differences. Of course, if they were construed in that sense there would be no doubt of their validity. Booth v. Illinois, 184 U. S. 425, 46 L. Ed. 623, 22 Sup. Ct. Rep. 425 But while the Supreme Court of California says in this case that it "will always see that legitimate business transactions are not brought under the ban," in the same sentence it leaves open the hypothesis that the provision "fails to distinguish between bona fide contracts and gambling contracts," and sustains it as a proper police regulation, even if it does fail as supposed. Therefore it may be held hereafter that ordinary contracts for the sale of stocks on margin are not legitimate transactions, and it would not be safe for us to take the words in any other than their literal meaning, or to assume in advance of a decision that they will be taken in a narrow sense. In this case the jury were instructed broadly to find for the plaintiff if he had paid any money to the

defendants as a margin for the purchase of stock of a corporation, and this instruction was sustained.

The objection urged against the provision in its literal sense is that this prohibition of all sales on margin bears no reasonable relation to the evil sought to be cured, and therefore falls within the 1st section of the 14th amendment. It is said that it unduly limits the liberty of adult persons in making contracts which concern only themselves, and cuts down the value of a class of property that often must be disposed of under contracts of the prohibited kind if it is to be disposed of to advantage, thus depriving persons of liberty and property without due process of law, and that it unjustifiably discriminates against property of that class, while other familiar objects of speculation, such as cotton or grain, are not touched, thus depriving persons of the equal protection of the laws.

It is true, no doubt, that neither a state legislature nor a state constitution can interfere arbitrarily with private business or transactions, and that the mere fact that an enactment purports to be for the protection of public safety, health, or morals, is not conclusive upon the courts. Mugler v. Kansas, 123 U. S. 623, 661, 31 L. Ed. 205, 210, 8 Sup. Ct. Rep. 273; Lawton v. Steele, 152 U. S. 133, 137, 38 L. Ed. 385, 388, 14 Sup. Ct. Rep. 499. But general propositions do not carry us far. While the courts must exercise a judgment of their own, it by no means is true that every law is void which may seem to the judges who pass upon it excessive, unsuited to its ostensible end, or based upon conceptions of morality with which they disagree. Considerable latitude must be allowed for differences of view, as well as for possible peculiar conditions which this court can know but imperfectly, if at all. Otherwise a constitution, instead of embodying only relatively fundamental rules of right, as generally understood by all English-speaking communities, would become the partisan of a particular set of ethical or economical opinions, which by no means are held semper ubique et ab omnibus.

Even if the provision before us should seem to us not to have been justified by the circumstances locally existing in California at the time when it was passed, it is shown by its adoption to have expressed a deep-seated conviction on the part of the people concerned as to what that policy required. Such a deep-seated conviction is entitled to great respect. If the state thinks that an admitted evil cannot be prevented except by prohibiting a calling or transaction not in itself necessarily objectionable, the courts cannot interfere unless, in looking at the substance of the matter, they can see that it "is a clear, unmistakable infringement of rights secured by the fundamental law." Booth v. Illinois, 184 U. S. 425, 429, 46 L. Ed. 623, 626, 22 Sup. Ct. Rep. 425, 427. No court would declare a usury law unconstitutional, even if every member of it believed that Jeremy Ben

tham had said the last word on that subject, and had shown for all time that such laws did more harm than good. The Sunday laws, no doubt, would be sustained by a bench of judges, even if every one of them thought it superstitious to make any day holy. Or. to take cases where opinion has moved in the opposite direction, wagers may be declared illegal without the aid of statute, or lotteries forbidden by express enactment, although at an earlier day they were thought pardonable at least. The case would not be decided differently if lotteries had been lawful when the 14th amendment became law, as indeed they were in some civilized states. See Ballock v. State, 73 Md. 1, 8 L. R. A. 671, 20 Atl. Rep. 184.

We cannot say that there might not be conditions of public delirium in which at least a temporary prohibition of sales on margins would be a salutary thing. Still less can we say that there might not be conditions in which it reasonably might be thought a salutary thing, even if we disagreed with the opinion. Of course, if a man can buy on margin he can launch into a much more extended venture than where he must pay the whole price at once. If he pays the whole price he gets the purchased article, whatever its worth may turn out to be. But if he buys stocks on margin he may put all his property into the venture, and being unable to keep his margins good if the stock market goes down, a slight fall leaves him penniless, with nothing to represent his outlay, except that he has had the chances of a bet. There is no doubt that purchases on margin may be and frequently are used as a means of gambling for a great gain or a loss of all one has. It is said that in California, when the constitution was adopted, the whole people were buying mining stocks in this way with the result of infinite disaster. Cashman v. Root, 89 Cal. 373, 382, 383, 12 L. R. A. 511, 26 Pac. Rep. 883. If at that time the provision of the constitution, instead of being put there, had been embodied in a temporary act, probably no one would have questioned it, and it would be hard to take a distinction solely on the ground of its more permanent form. Inserting the provision in the constitution showed, as we have said, the conviction of the people at large that prohibition was a proper means of stopping the evil. And as was said with regard to a prohibition of option contracts in Booth v. Illinois, 184 U. S. 425, 431, 46 L. Ed. 623, 627, 22 Sup. Ct. Rep. 425, we are unwilling to declare the judgment to have been wholly without foundation.

With regard to the objection that this provision strikes at only some, not all, of the objects of possible speculation, it is enough to say that probably in California the evil sought to be stopped was confined in the main to stocks in corporations. California is a mining state, and mines offer the most striking temptations to people in a hurry to get rich. Mines generally are represented by stocks. Stock is convenient for purposes of speculation, because of the ease with

which it is transferred from hand to hand, as well as for other reasons. If stopping the purchase and sale of stocks on margin would stop the gambling which it was desired to prevent, it was proper for the people of California to go no farther in what they forbade. The circumstances disclose a reasonable ground for the classification, and thus distinguish the case from Connolly v. Union Sewer Pipe Co., 184 U. S. 540, 46 L. Ed. 679, 22 Sup. Ct. Rep. 431. We cannot say that treating stocks of corporations as a class subject to special restrictions was unjust discrimination or the denial of the equal protection of the laws. Judgment affirmed.

Mr. Justice Brewer and Mr. Justice Peckham dissented.

NOTE.-Validity and Application of Statutes Prohibiting all "Futures" or Dealing on "Margins.”— Many states, in attempting to eradicate the evils of gambling, have gone to the extreme of denying validity to all forms of future contracts or dealings on margin. To show how far these statutes have gone it is only necessary to call attention to the fact that in England and in the majority of states future contracts and sales on margin are perfectly valid. The rule is well stated in Dillaway v. Alden, 88 Me. 230. Where the court said: "Speculation is not necessarily gambling. So long as there is a real transaction-so long as something is actually bought or sold, or is actually contracted for, either for purchase or sale, there is no wagering, not even if the thing contracted for does not then exist. Nor does a subsequent change in or cancellation of the contract affect its original validity." In many states however, all dealings in futures or on margin are, by statute, constitutional provision or decision of its courts, held to be gambling contracts and therefore void. Cashman v. Root, 89 Cal. 373, 23 Am St. Rep. 482; Moss v. Exchange Bank, 102 Ga. 808; Connor v. Black, 119 Mo. 126; Shea v. Metropolitan Stock Exchange, 168 Mass. 284. Dillard v. Brenner, 73 Miss. 130; Gist v. Telegraph-Co., 45 S. Car. 344, 55 Am. St. Rep. 763. In Mississippi, this is no longer the law the statute having been repealed in 1892. This statute was very severe, and, as construed by the Mississippi supreme court, forbade any enforcement in that state of future contracts no matter when and where made. Hence brokers who had made future sales in a jurisdiction where they were lawful could not recover in Mississippi for their commissions and advances. Lemonius v. Mayer, 71 Miss. 514, 15 So. Rep. 66.

The constitutionality of such statutes have not frequently been called in question. In the case of Crandell v. White, 164 Mass. 54, 41 N. E. Rep. 204. The Supreme Court of Massachusetts held that an act allowing one who buys or sells on credit or margin securities or commodities without intending to receive or deliver the same or pay the price, or one who employs another so to buy or sell for him, to recover in an action of contract the money so paid out, is not unconstitutional, as giving principals a remedy against their agents, or as making certain conduct prima facie evidence of the existence of a certain fact. The court said: "We discover no ground on which the statute can be held to be unconstitutional. The legislature may well have deemed the transactions referred to in it a species of gambling. And it is too well settled to require discussion that laws aimed at the ".suppression of gambling are constitutional." The

case of Booth v. Illinois, 184 U. S. 425, 22 Sup. Ct. Rep. 425, 54 Cent. L. J. 230, upheld the right of the state of Illinois to pass a law prohibiting option contracts. The court said: "A calling may not in itself be immoral, and yet the tendency of what is generally or ordinarily or often done in pursuing that calling may be towards that which is admittedly immoral or pernicious. If, looking at all the circumstances that attend, or which ordinarily attend, the pursuit of a particular calling. The state thinks that certain admitted evils cannot be successfully reached unless that calling be actually prohibited, the courts cannot interfere, unless, looking through mere forms and at the substance of the matter, they can say that the statute enacted professedly to protect the public morals has no real or substantial relation to that object, but is a clear, unmistakable infringement of rights secured by the fundamental law." It is very evident from the position of the United States Supreme Court that state legislature will be given a wide latitude in enacting legislation of the character under consideration.

women

JETSAM AND FLOTSAM.

BEQUEST OF A HUSBAND.

state

A New York woman is reported as having in her last will and testament bequeathed her husband to another woman. "It will be interesting to note," says Harper's Weekly, "the result of this testamentary disposition of a peculiar kind of personal property by one who has been supposed to have only a life interest in the premises." Married have, by the various statutes, been vested with large powers in dealing with their separate estates, but as yet the courts have not been called upon to decide whether, under the Married Woman's Act, a husband is a part of a feme covert's separate estate, subject to disposition by will or otherwise. If it be admitted that in the hereafter the wife may claim the husband as her own again, the inference would be strong that she has the power of disposition of the interest intervening between her death and the husband's demise on the principle that the common law does not view with favor an estate in abeyance. But this hypothesis cannot be accepted as resting on any sound basis in view of the biblical expressions to the contrary. The question is one of first impression and one which the courts must wrestle with as best they may.-Law Notes.

BOOK REVIEWS.

EATON AND GILBERT ON COMMERCIAL PAPER.

The law relating to commercial paper seems to have sufficient number of champions among legal textbook writers. Messrs. James W. Eaton and Frank B. Gilbert have just entered the field of authors on this subject, and by their conjoint endeavor have produced, in one volume, a practical and exhaustive treatise on the law of commercial paper, covering all this important subject in every detail. This work is complete in every respect. It embraces all the law relating to commercial paper, including promissory notes, bills of exchange, checks, municipal bonds and coupons, and all other instruments, negotiable and non-negotiable, commonly classed as commercial paper. It is adapted for use in every state. The text contains the rules of law relating to this subject as declared by the courts of every state. Cases in every jurisdiction, including those decided and reporte