the corporate powers. If in these cases the corporation has power to receive its own shares, there seems no reason in the nature of things why it has not power to purchase under other circumstances. Moreover, the objection cannot be raised that the corporation by such dealings increases or diminishes its capital stock, a thing frequently forbidden by statute, because the authorities are practically unanimous in holding that the purchase does not extinguish the shares bought but merely transfers them into the hands of the company. Hence the objection to the practice instead of resting on a lack of power must find its logical basis in the disadvantages to other shareholders and to corporate creditors which may result from such transactions.

There seem two objectionable features to such purchases so far as other shareholders are concerned. First, the purchase of shares reduces the amount of capital embarked in the corporate enterprise and thus the burden of meeting the company's liabilities falls more heavily on the remaining shares. In the event of insolvency, in case shareholders have some form of individual liability, or if they are only liable to the full par value of their stock, the amount for which each shareholder may be held is made correspondingly larger. Second, the buying in of stock with corporate funds in part contributed by a minority opposing the sale may well enable a rival majority to obtain a strangle hold upon the corporate affairs, since the amount of votable stock is thereby temporarily at least decreased and the influence of the majority made correspondingly greater. These considerations, however, do not furnish a conclusive ground for absolutely prohibiting such transactions, but merely should give to any non-consenting shareholder a right to have them set aside."

5

The objections as to the reduction of the fund available for the payment of the company's debts apply even more strongly to creditors, but the courts seem more or less at a loss as to how to treat this situa

Taylor v. Miami Exporting Co. 6 Oh. 176; see St. Louis Rawhide Co. v. Hill, 72 Mo. App. 142, 148 (in payment of a debt due the corporation); see German Savings Bank v. Wulfekuhler, 19 Kan. 60, 65 (in security of a debt due the corporation); State v. Oberlin Building & Loan Association, 35 Oh. St. 258 (took stock and released from liabilities on it and collateral). Likewise receipt by way of gift or devise would probably be sustained in these jurisdictions although the question has only been adjudicated elsewhere. Lake Superior Iron Co. v. Drexel, 90 N. Y. 87; Rivanna Navigation Co. v. Dawsons, 3 Gratt. (Va.) 19.

On the theory of choses in action, this is hardly sustainable, but the stock is apparently treated more like a chattel or negotiable note, and, in the absence of contrary evidence is considered to be merely temporarily retired and to be subject to re-issue. State v. Smith, 48 Vt. 266; City Bank of Columbus v. Bruce, 17 N. Y. 507; Commonwealth v. Boston & Albany R., 142 Mass. 146, 7 N. E. 716; see Williams v. Savage Mfg. Co., 3 Md. Ch. 418, 452; Currier v. Lebanon Slate Co., 56 N. H. 262, 268; Taylor v. Miami Exporting Co., 6 Oh. 176, 219; contra, 1 MORAWETZ, PRIVATE CORPORATIONS, 2 ed., § 112.

5 For although shares of stock bought in by the corporation are not extinguished they cannot of course be voted while held by the company. American Ry. Frog Co. v. Haven, 101 Mass. 398; M'Neely v. Woodruff, 13 N. J. L. 352.

For a more detailed explanation of this objection, see I MACHEN, MODERN LAW OF CORPORATIONS, § 626.

7 Currier v. Lebanon Slate Co., 56 N. H. 262; cf. Glenn v. Hatchett, 91 Ala. 316, 8 So. 656; (agreement to release a shareholder from unpaid subscriptions on stock, retiring a part and treating remainder as fully paid).

9

8

tion. Many courts have held that the assets of the corporation are a trust fund for the benefit of creditors. But this theory even if valid does not solve the problem, for the assets do not become a trust fund until the corporation is insolvent, and it is clear that even before insolvency a reduction in the actual capital may work a detriment to creditors in that it takes away their right to look to the entire capital as a security for the indebtedness of the corporation. The proper treatment of the situation would seem to be on the recognized principle of fraudulent conveyances. That is, any such reduction is a fraud on prior creditors because it is a distribution of assets for which nothing of value to the creditors is received in return; and on subsequent creditors because they contract on faith of assets represented by the capital stock.10 Accordingly a purchase by an insolvent corporation of its own shares either by cash or note should be voidable." If the corporation was solvent but made the payment from its capital fund, it would seem that the creditors should in every case be able to avoid the transaction,12 this being particularly clear where the need of those assets to pay their debts could be foreseen. 13 Where the purchase is made from such surplus as could legitimately be paid in dividends the above objection would not apply, however, because the assets on which the creditors have a right to rely have not been depleted.14 Yet, if the result would be to free from individual liability a shareholder who would otherwise be personally liable to creditors, it would seem that the transaction should be voidable, but only to the extent of permitting a recovery by the creditor of the amount of this personal liability.15 In a recent case,

8 This theory was first adopted by Story, J., in Wood v. Drummer, 3 Mason (U.S.) 308.

• See Graham v. Railroad Co., 102 U. S. 148, 161; Hollins v. Brierfield Coal & Iron Co., 150 U. S. 371, 383.

10 Hospes v. Northwestern Mfg. & Car Co., 48 Minn. 174, 50 N. W. 1117. For a fuller discussion of this problem, see 20 HARV. L. REV. 401.

11 In re Smith Lumber Co., 132 Fed. 618; Buck v. Ross, 68 Conn. 29 (using the language of the trust theory).

12 The corporation should be treated as under an absolute duty to keep its entire capital fund as a margin of safety for creditors. On this theory any decrease in that fund would be a fraud upon them even though at the time its retention seemed unnecessary.

13 Hence the cases which purport to proceed on the trust theory, despite the fact that no trust should arise until after insolvency, have in general protected the corporate creditors by holding such transactions void as to them. Crandall v. Lincoln, 52 Conn. 73 (showing that the shareholder will not be permitted to retain the assets received, as a bonâ fide purchaser without notice); Tait v. Pigott, 32 Wash. 344, 73 Pac. 364. See Hamor v. Taylor-Rice Engineering Co., 84 Fed. 392. But see Marvin v. Anderson, 111 Wis. 387, 87 N. W. 226. And note the same result where dividends are paid out of the capital fund. Fricke v. Angemeier, 101 N. E. 329 (Ind.); Detroit Trust Co. v. Goodrich, 175 Mich. 168, 141 N. W. 882. Contra, McDonald v. Williams, 174 U. S. 397.

14 I COOK, CORPORATIONS, 7 ed., § 311; Fraser v. Ritchie, 8 Ill. App. 554; Howe Grain & Mercantile Co. v. Jones, 21 Tex. Civ. App. 198, 51 S. W. 24; Dock v. Schlichter Jute Cordage Co., 167 Pa. St. 370, 31 Atl. 656. In 1 MACHEN, MODERN LAW OF CORPORATIONS, § 626, it is argued that a fraud upon creditors occurs here, since the reduction of the amount of capital stock outstanding makes it possible for the corporation to thereupon reduce its assets to the point to which the capital has been reduced. This argument, however, assumes that stock purchased is retired and reduces the amount of capital which we have seen to be contrary to authority. See Note 4.

15 No cases upon this point have been found. It is submitted, however, that there

however, a corporation having a surplus in hand purchased stocks outstanding by note. It was held that, on subsequent insolvency of the company the holder could not come in with general creditors to claim a dividend from the company upon his claim. In re Fechheimer-Fishel Co., 50 N. Y. L. J. 2853 (C. C. A., 2nd Circ.). It is possible that there were elements of fraud in the transaction not fully disclosed by the report which justified this result. Unless there were such facts, if we concede the power of the corporation to purchase its own stock, there seems no reason why the creditors should have been allowed to avoid this transaction.

THE RIGHT TO TAKE FISH AND GAME IN NAVIGABLE NON-TIDAL WATERS. Since it is often said that only those waters in which the tide ebbs and flows are navigable under the common law of England, it is important to observe carefully the technical meaning of the word navigable when so used. At an early date title to the land beneath the sea and tidal rivers was conceived to be in the king,1 whereas title to the land under inland waters where the tide did not ebb and flow, was in the private riparian proprietors.2 Perhaps because tide water in England included nearly all water navigable in fact, or because of the Lord Admiral's jurisdiction over shipping in tidal waters,3 the term "navigable water" came to be loosely used as a synonym for tide water.

While no one can obtain absolute property in fish and game except by reduction to possession, and therefore their ownership while uncaptured does not go with the realty; the right to take creatures fera naturæ, transiently upon land, is recognized as a valuable property right incident to its ownership.5 So in ancient times, the right to fish in the sea was the exclusive prerogative of the king as lord of the soil; but either by Magna Charta, or by the gradual encroachment upon royal prerogative as the representative character of the sovereign became recognized, the king's right to the sea came to be regarded as held in trust for the public, and the right to fish became free and common to all. This right though arising independently of the public ownership of the soil, thus chanced here to be co-extensive with the right of navigation. In English non-tidal streams, however, the exclusive right of fishery is in the riparian proprietor of the soil. Inasmuch as these inland waters

is no fraud in the transaction as against creditors except as it releases the shareholder from individual liability and that creditors cannot set aside the transaction to any greater extent and cannot claim the purchase price received for the shares.

1 HALE, DE JURE MARIS, cap. 4.

2 Ibid., cap. 1.

3 See Ilchester v. Raishleigh, 61 L. T. N. S. 477, 479.

4 See Geer v. Connecticut, 161 U. S. 519, 16 Sup. Ct. 600.

So that a statute requiring a license for non-resident hunters is unconstitutional as applied to non-resident landowners. State v. Mallory, 73 Ark. 236, 83 S. W. 955. And see cases cited in note 14, infra.

6 See 2 FARNHAM, WATERS AND WATER RIGHTS, § 368.

7 Pearce v. Scotcher, L. R. 9 Q. B. D. 162; Smith v. Andrews, [1891] 2 Ch. 678; Murphy v. Ryan, Ir. R. 2 C. L. 143. See Reece v. Miller, L. R. 8 Q. B. D. 626. As to fowling see Fitzhardinge v. Purcell, [1908] 2 Ch. 139.

are subject to a public easement of navigation, it is clear that the right to hunt and fish has no connection with the right of navigation, but is an incident of the land.

Thus in those American jurisdictions where the riparian abutter on a non-tidal stream owns to the medium filum it should follow that on such streams the public have no right to take fish and game.10 But the fact that the public right to take fish and game co-exists with the right of navigation in tidal or so-called "navigable" waters has led some courts to consider these rights inseparable." Such a misconception is indicated in the result of a recent Wisconsin decision, holding that the public as an incident to the right of navigation, has a right to take game, over the privately owned bed of a navigable fresh water stream.12 Diana Shooting Club v. Husting, 145 N. W. 816 (Wis.).

Not only is there no historical connection between the right to hunt and fish and the right of passage, but there is also no basis on reason or analogy for the connection. Although other servitudes in the nature of easements may be annexed by custom or prescription to an easement of passage,13 the right to take fish and game cannot be thus annexed because it is not an easement but a profit à prendre, which the public cannot acquire by customary or prescriptive user.14 Aside from annexed incidents, a public right of passage upon land includes only those rights reasonably necessary for the enjoyment of the easement.15 Accordingly one who uses a public way as a vantage ground for observing the training of horses in adjoining fields,16 or for launching profanity at the ser

8 HALE, DE JURE MARIS, caps. 1, 2, & 3. The cases in the preceding note all concern waters navigable in fact.

Kinkead v. Turgeon, 74 Neb. 573, 109 N. W. 744; Brown v. Chadbourne, 31 Me. 9; Farris v. Bentley, 141 Wis. 671, 124 N. W. 1003; Hardin v. Jordan, 140 U. S. 371, II Sup. Ct. 808; Webber v. Pere Marquette Boom Co., 62 Mich. 626, 30 N. W. 469; Lattig v. Scott, 17 Idaho 506, 107 Pac. 47; Cobb v. Davenport, 32 N. J. L. 369; Middleton v. Pritchard, 4 Ill. 510; June v. Purcell, 36 Oh. St. 396.

10 In some American jurisdictions where the bed of streams navigable in fact is owned by the state, the right of fishery is of course public. Carson v. Blazer, 2 Binn. (Pa.) 475. The rule applied to the Great Lakes is the same as that applied to tide waters. Ainsworth v. Munoskong Club, 153 Mich. 185, 116 N. W. 992; Lincoln v. Davis, 53 Mich. 375, 19 N. W. 103; Sloan v. Biemiller, 34 Oh. St. 492.

11 Forrestier v. Johnson, 164 Cal. 24, 127 Pac. 156. In Ohio, seemingly, public fishing, but not public fowling, is incident to navigation. Winous Point Shooting Club v. Bodi, 20 Oh. Cir. Ct. R. 637.

12 Art. 9, § 1, of the Wisconsin Constitution provides that navigable streams "shall be common highways and forever free . . . without any tax impost or duty therefor." Under this section a statute declaring a public right to take fish in all navigable streams had previously been held valid. Willow River Club v. Wade, 100 Wis. 86, 76 N. W. 273. It is submitted that this section applies only to navigation and that such a statute in effect is a deprivation of property without due process of law. See 2 FARNHAM, WATERS AND WATER RIGHTS, § 368 c; cf. Hartman v. Tresise, 36 Colo. 146, 84 Pac. 685.

13 State v. Laverack, 34 N. J. L. 201, 206.

14 Gatewards case, 6 Coke, 59 b; Ordeway v. Orme, 1 Bulst. 183; Johnston v. O'Neill, [1911] A. C. 552; Smith v. Andrews, [1891] 2 Ch. 678; Murphy v. Ryan, Ir. R. 2 C. L. 143; Cobb v. Davenport, 33 N. J. L. 223; Beach v. Morgan, 67 N. H. 529, 531, 41 Atl. 349, 350.

15 Woodruff v. Neal, 28 Conn. 165; Stackpole v. Healy, 16 Mass. 33; Cole v. Drew, 44 Vt. 49.

16 Hickman v. Maisey, [1900] 1 Q. B. 752.

vient owner,17 or for frightening 18 or shooting 19 his game, becomes a trespasser upon the servient tenement. And one in the pretended exercise of an easement of navigation over privately owned subaqueous land, who takes ice 20 from the surface or gravel 21 from the bed of the stream is likewise clearly a trespasser. The argument that as fish and game have no owner, anyone has a right to take them wherever he has a right to be,22 is thus answerable in that the taker has no right on the highway for that purpose. On these grounds the majority of the courts have reached a result opposed to that of the principal case.23

THE DEVELOPMENT OF WHITBY V. MITCHELL. The recent case of In re Park's Settlement, [1914] 1 Ch. 595,1 contains a new application of the rule in Whitby v. Mitchell, against limiting land to an unborn person for life, with remainder to the issue of that person, which, according to In re Nash,3 is the modern English form of the old rule against a possibility upon a possibility. In Park's Settlement, land was limited (in the events that happened) to the use of John Foran for life, and after his death, if he left a widow surviving him, to the use of such widow for her life, and after her decease, if he left issue surviving him, to such issue or such of them as should attain the age of twenty-one years. John Foran was a bachelor at the date of the deed and afterwards married and had one child. His wife and child survived him, and on the death of his wife, the validity of the limitation to his issue was questioned on the ground that, as he, being a bachelor, might have married a lady unborn at the date of the deed, the limitation of a remainder to children who might be born of her as his wife, following a limitation to her for life, offended against the rule. Eve, J., held that the contention was well founded, and that the limitation to the issue was void. If this is a correct application of the rule, it seems to open up the way to new and unexpected catastrophes. It does not seem to be material that John Foran was a bachelor, for, if he had been married and his wife and child had been living at the date of the deed, it was possible that they might have died, and that another wife (unborn at the date of the deed) and another child might have survived him. And, if the child of the first marriage in fact survived, he could not take under the limitation, because, until the event, it was possible that he might have died, and a child of the second marriage, and not he, might have survived. As the

17 Adams v. Rivers, 11 Barb. (N. Y.) 390.

18 Harrison v. Rutland, [1893] 1 Q. B. 142.

19 The Queen v. Pratt, 4 E. & B. 860; L. Realty Co. v. Johnson, 92 Minn. 363, 100 N. W. 94.

20 Washington Ice Co. v. Shortall, 101 Ill. 46.

21 Archer v. Greenville Sand & Gravel Co., 34 Sup. Ct. 567.

22 See dissent in Sterling v. Jackson, 69 Mich. 488, 519, 37 N. W. 845, 861.

23 Hunting-Schulte v. Warren, 218 Ill. 108, 75 N. E. 783; Sterling v. Jackson, 69

Mich. 488, 37 N. W. 845; State v. Shannon, 36 Oh. St. 423; fishing — Hooker . Cummings, 20 Johns. (N. Y.) 90; Adams v. Pease, 2 Conn. 481.

1 The case is also reported 58 Sol. J. 362.

242 Ch. D. 494, 44 Ch. D. 85 (1890).

3 [1910] 1 Ch. D. pp. 9-10.