landowners. Neither in England, where the only privity is that of landlord and tenant, nor probably even on the peculiar American theory of dominant and servient tenement, was there sufficient privity to allow the burden of the covenant to run from X to B. While even the running of the benefit, as involved in the transfer from A to C, would present difficulty in some jurisdictions, such a covenant being held purely personal to A as touching not his land but that of the defendant. Cole v. Hughes, 54 N. Y., 444 (1873); Gibson v. Holden, 115 Ill., 199 (1885). In England, on the other hand, the beneficiary of a contract cannot sue, and C had no rights on the covenant subsequently entered into between X and B. Hence the problem confronting the Court was how to find sufficient privity of contract to allow a recovery. A recent article (14 Harv. Law Rev., 297), while condemning the reasoning of the Court, advocates a recovery by the plaintiff on the theory of covenants running with the land. Where such an agreement, it was said, has regard to any wall that may be built, and not to a specific wall, it is a continuing covenant, encourages the adjoining owner to build, or rebuild if the first wall is destroyed, leads to the improvement of the land, and should not be deemed a burden or precluded as such from passing to the vendee. We venture to think the average business man would be surprised at a theory which characterizes as beneficial to his land a restriction pecuniarily injurious to himself as owner. The agreement, it is submitted, really benefits the land of him who has built the wall and is entitled to the money; as to the other lot it is properly a burdensome restriction. Thus this theory is unsatisfactory, and we are led to examine the reasons advanced by the English Court, for on these, if at all, is the case to be supported. The argument is briefly as follows:

The defendant, it is said, by his contract with X had clearly intended to make himself liable to some one. While the plaintiff had acquired from A both the latter's "license" [easement?] to build and maintain a wall on the adjoining land and his right to be paid therefor. Hence, the circumstances were sufficient to raise a privity and an implied contract between the plaintiff and the defendant at the moment of the user of the wall by the latter. The weak spot in the reasoning is that it fails to show any consideration by plaintiff for defendant's promise to pay, and it would seem that none can be shown. But the interesting point lies in the fact that equity would certainly have decreed specific performance of a restrictive covenant under exactly similar circumstances, and the Court is apparently seeking to apply to affirmative covenants at law the doctrine which obtains in regard to restrictive covenants at equity—that they will be enforced against the covenantee or his assignee with notice in favor of any third party holding the land meant to be benefited thereby, whether he previously had knowledge of the restriction or not. But the doctrine of equitable easements as developed rests on no theory of contracts, and it would seem at least a questionable step to extend the principle there involved to actions at law.

Assuming, however, that Irving v. Turnbull is correctly decided,

it does not control Lincoln v. Burrage.

The defendant in this

case had never contracted with any one unless the covenant of his vendor ran with the land, while the plaintiff no longer retained any interest in the adjoining property. The Court which decided Irving v. Turnbull would doubtless have held the same as the Supreme Court of Mass.

INSURANCE.-ONE YEAR TERM POLICIES.-Few decisions of recent years have so excited the interest of life insurance people as that of the Bankers' Life Insurance Company of New York v. Insurance Commissioners, 48 Atl.—, decided January 30, 1901. The Supreme Court of Vermont granted a mandamus to license the petitioners to do business in Vermont. The statute of that State directs that a foreign insurance company shall be licensed only after the company has proved that it possesses inter alia assets equal in amount to its outstanding liabilities "reckoning the premium reserve on its life risks based on the Actuaries' Tables of Mortality, with interest at four per cent., as a liability." V. S., § 4178. The petitioners claimed that their policies were so worded as to amount to two contracts, viz., a one year term policy and a life policy to commence one year from date. This first year term policy, the company claimed, required no reserve. The difference between "term" and "life" insurance is most important. In the former, the policy holder is insured only during the term, with no right to renew the contract at the same rate. Thus, a man who insures his life annually, by one year terms, would pay rapidly increasing premiums each year, whereas if he takes out a life policy he starts at a much higher rate which, however, remains uniform. In life insurance a company insures a rapidly increasing risk at a uniform rate by collecting a reserve, when the policy begins to run, sufficient to bring the premiums up to the cost of insurance when the policy and the insured are old. The commissioners had refused to license the petitioners on the ground that the policies in question were, in fact, life policies, requiring a reserve from the first year. The obligations and rights of both parties were identical with those in the ordinary life policy; therefore, to call the first year a term policy was a mere misnomer, (1899 Vt. Ins. Com. Report, p. 12). Chief Justice Taft, in delivering the unanimous decision of the Court, paid little, if any, attention to the contentions of counsel of either of the parties and decided the case on points not raised by counsel in their briefs or in argument. He said that the spirit of the statute was directed against insolvent companies, and that the premium reserve was no test of a companies' actual solvency. Actuarial science required that all companies must collect a reserve to meet the increasing risks of life insurance, but it made no difference when this reserve was collected. To require a young company to accumulate a sufficient reserve during its first year would be to smother it in its swaddling clothes. The petitioner's interpretation of the statute "would create such monopolies that the modern trusts would blush for their departing laurels. From a legal point of view it is unfortunate that

the learned justice did not rest his decision on more legal grounds. His reasoning based upon public policy and business necessity should be well considered by legislatures before any further statutes similar to that in Vermont are passed. The time-honored custom which requires a premium reserve during the first year of a life policy would seem to be of doubtful propriety. If the premiums are so arranged that a sufficient reserve must of necessity be collected before the annual risk becomes larger than the annual premium, why need this reserve be collected at any particular stage in the life of the policy? But this is not the reasoning of the statute, which must refer to the time-honored method of reckoning reserves. The policies of the petitioners were drawn in order to avoid what they considered an unjust statute and they rested their claims on the peculiar form of their policy. Their contentions are strong and had the decision been rested upon them, it would probably carry more weight. It would show the uselessness of trying to compel a company to collect its reserve at any particular period in the life of the policy-a company can issue term insurance to cover any period during which it does not want to lay up a reserve. It cannot do this for any great length of time, because the reserve on a policy must be collected sometime before the risk equals the annual premium, and it would be impossible to accumulate enough if the number of years were cut down beyond a certain limit. The company should merely be required to show that it is collecting enough to have a reserve on hand for each policy before the annual risk equals the annual premium.

BANKRUPTCY-REVOCATION OF DISCHARGE.-If it be shown that a discharge was "obtained through the fraud of the bankrupt, and that the knowledge of the fraud has come to the petitioner since the granting of the discharge, and that the actual facts did not warrant the discharge," the District Court will, by Section 15, revoke the discharge. The Act of 1867, Sect. 34, was construed to mean that a discharge was to be set aside only because of new evidence which, if known at the time, would have prevented a discharge, and the fair import of the 1898 Act is that, primarily, the fraud urged should not be open to the plea of res judicata. In the case in re Hoover, 5 Am. B. R., 247 (E. D. C., Pa., 1900), the Court makes considerable point of fraud in obtaining the discharge as the only ground for a revocation. Judge BROWN, in re Meyers, 3 Am. B. R., 722 (S. D. C., N. Y., 1900), said that the same facts which would have prevented a discharge constitute a fraud in the procuring of the discharge. Judge LowELL, in re Rudwick, 2 Am. B. R., 114 (D. C., Mass., 1899), speaks of a revocation only on the ground of fraud in the procuring of a composition. Unless any fraud which would have prevented the granting of a discharge is per se a fraud in procuring a discharge, this narrow interpretation is not consistent with the Act of 1898; and if these distinctions in kind of fraud are without a difference, the real governing principle is

the discovery subsequent to the discharge made by parties in interest "that the actual facts did not warrant the discharge," provided that application for a revocation is made within one year after the discharge.

It

BANKRUPTCY-PREFERRED CREditor's Set-off.-That a creditor who receives a payment, though innocently, after the debtor is in fact insolvent is a preferred creditor seems the prevalent construction of Sections 57g, 60a, b, 1 COLUMBIA LAW REVIEW, 53. But it is yet disputed whether such a creditor may avail himself of the set-off allowed by Section 60c. According to that Section a preferred creditor who has "in good faith" sold the debtor more goods on credit without security can set-off the amount of this sale "against the amount which would otherwise be recoverable from him. has been said that the section applies only to a guilty preferred creditor described in Section 60b, because of the words "recoverable from him," for the reason that it is only a guilty preference which is by the act recoverable. In re Christensen, 4 Am. B. R., 202 (N. D. C. Iowa, 1900). Consequently, an innocent preferred creditor who offered to pay back the excess of the preference above the set-off was denied the privilege of Section 6oc. In interpreting that section too much weight has been given to the word "recoverable," and too little to the words "in good faith." One who has received a preference knowing of his debtor's insolvency could hardly be said to make a sale later to this same insolvent debtor in good faith. There is not much likelihood that a creditor will contribute his goods to help pay debts to others; and yet, unless a guilty preferred creditor has this intention he would not be extending further credit in that good faith required by the act.

There is no good reason to believe that the word "preference" in Section 6oc has a different meaning from the same word in Section 60a or Section 57g, and the words "recoverable from him," if read in the light of these several sections would refer to the return of any preference by any creditor as a condition sine qua non of his proving his claim. Accordingly, an innocent preferred creditor, the only one who can answer to the description as to giving the insolvent further credit in good faith, should be allowed to prove his claim on paying the excess of his preference over the amount of unsecured credit given after receipt of the preference. So it has been held by GRosscup, J., in McKey v. Lee, 5 Am. B. R. 267 (C. C. A. Ill., 1901). The few cases in which section 6oc has been construed take it for granted that it applies to guilty preferred creditors; but in this view the fundamental purpose of the act seems to have been overlooked. The guilty preferred creditor cannot say that he has extended further credit on the faith of the payment of his previous claims, because he knew of his debtor's insolvency, and the use of words seeming on first blush pertinent to him is not of itself sufficient to controvert the general design of the Legislature to discourage any fraud on creditors.

Accordingly, it is submitted that both In re Christensen and

McKey v. Lee misconstrue the intention of the act in admitting the application of Section 6oc to guilty preferred creditors, but that the latter case correctly applies it to an innocent preferred creditor.

FIRE INSURANCE. -WAIVER OF INCUMBRANCE PROVISION.-The New York Court of Appeals, by a division of four to three, on February 5, 1901, rendered a decision of great interest and importance to the insurance world. Skinner v. Norman, Jr., New York Law Journal, February 25, 1901. The plaintiff sent his agent to procure insurance on a steamboat. The agent of the insurance company asked if the boat was encumbered and was told he could learn by inquiry of the owner. This inquiry he agreed to make. The policy contained a provision making it void, unless all encumbrance should be noted therein. The boat was mortgaged, but no mention of the mortgage was made in the policy. Held, that the company had waived the warranty against incumbrance.

It is perhaps significant that the Court puts its decision upon two grounds, which do not strengthen each other, but involve totally different principles. One is notice to the company of the encumbrance, the other is the authority of the agent to undertake to search the title of the insured. It is settled law in New York, and most jurisdictions generally, that actual knowledge of the agent of ground for forfeiture is constructive notice to the company, and that the company waives the warranty against encumbrance by issuing a policy if, at the time the application was made, the agent knew the policy could be avoided.

out.

Van Schaick v. Niagara Falls Ins. Co. 68 N. Y. 434 (1877); Gray v. Germania Fire Ins. Co. 155 N. Y. 180 (1898); Continental Ins. Co. v. Chamberlain, 132 U. S. 304 (1889); Mahoney v. Natl. & Life Ass'n, L. R., 6 C. P. 252 (1871); Germania Fire Ins. Co. v. McKee, 94 Ill. 494 (1880). If, then, the agent of the company had actually known of the mortgage on the boat, the plaintiff's right to recover on the policy would be clear. But such is not the fact. The agent did not know, he merely said he would find Nevertheless the Court extended the doctrine of constructive notice to the company to this case, relying upon the analogy between the waiver of an unknown breach of warranty and a general release. This seems to lose sight of the real difficulty. Had the insured dealt directly with the company, instead of an agent, the analogy would be more complete. Furthermore, a general release raises no question of admitting parol evidence to vary the written instrument. The two essentials to constitute a waiver of a condition broken at the time the policy is issued have been supposed to be actual knowledge of the agent and delivering the policy by the company. Hereafter in New York actual knowledge of the agent is unnecessary if he might have known, or has volunteered to find out. Constructive notice to the agent of material facts is made constructive notice to the insurance company. Since the rule as formerly applied was anomalous, the sound