RECENT CASES. 4^5 organized plaintiff corporation under the laws of Pennsylvania. X. then conveyed to plaintiff without consideration, and plaintiff brings suit in the Federal Court. Held^ that such conveyance would not enable the grantee to maintain suit. Shiras, Field, and Brown, ]]., dissenting. Lehigh Co. v. Kelly, i6 Sup. Ct. Rep. 307. The rule is well established that notice in this class of cases will not affect the right of the grantee to Federal jurisdiction if the conveyance was a real transaction and there was no secret agreement giving grantor a right to call for reconveyance. McDonald v. Smalley, i Pet. 625 ; Barney v. Baltimore City, 6 Wall. 280. The court admits that there was no such secret agreement between the two corporations, but in view of the fact that no consideration was paid, it goes behind the entity of the plaintiff corporation and finds what it calls an " equivalent to such agreement," namely, the right and power of those who are stockholders in each corporation to compel the plaintiff to reconvey to X. without consideration. If there had been a consideration for the conveyance, the question of whether the court would look behind the entity would have been very squarely presented. This is a question that is constantly arising in different phases. Compare Northwestern Banking Co. v. Muggli^ 65 N. W. Rep. 442 (S. D.), and Howes V. Oakland, 104 U. S. 450. Corporations — Unpaid Subscriptions — Illegality Subsequent to Incor- poration. — In an action by a corporation to recover unpaid subscriptions to its capital stock, the defence was set up that the corporation had entered into illegal transactions subsequently to its incorporation. Held, that this is no defence, the objects of incorporation being on their face legal. U. S. Vinegar Co. v. Foehrenbach, 42 N. E. Rep. 403 (N. Y.). The case simply follows U. S. Vinegar Co. v. Schlegel, 143 N. Y. 537, which laid down the doctrine that subsequent acts of illegality, though they might be good ground for vacating the charter in a direct action by the State, were no defence to an action by the corporation to recover unpaid stock subscriptions. Damages — Conversion of Stock by one Authorized to Transfer it as Collateral. — Stock in a certain company was issued to the defendant in his own name for the benefit of the plaintiff, from whom he had authority to transfer it as col- lateral security for a loan of $5,000 for the plaintiff. Having transferred the stock to W. to secure the loan, turning the proceeds over to the plaintiff as per agreement, he subsequently sold it to W. absolutely, without accounting to the plaintiff, who seeks to recover for the alleged conversion. Held, plaintiff was not entitled to recover the full value of the stock, but must deduct the amount received as the loan. Van Shaick V. Ramsey, 35 N. Y. Supp. 1006. The result reached seems correct. The difficulty is to find a conversion on the part of the defendant when he has already transferred the legal title with the authority of the beneficial owner ; moreover, the plaintiff never had legal title to the stock himself. The first objection is perhaps obviated by the fact that, though the court speaks of the first transfer by the defendant as a mortgage, it is more properly regarded as a pledge, the legal title remaining in the pledgor. Lowell on Transfer of Stock, § 53 : Lewis v. Grahatn, 4 Abb. Pr. 106. A simpler way of treating the case would seem to be as a breach of trust on the part of the defendant in releasing the equity of redemption which he held in trust for the plaintiff, in which view of the case the amount of damages would follow as a matter of course. Damages — Electric Railway — Use of Cable Track — Compensation. — An electric railway was granted by the city of St. Louis the right of using the tracks of a cable railway. The cable company was allowed a sum equal to six per cent per annum on half the cost of building. Held, the cost of building the cable conduit should be included, though the conduit cannot be used by the electric company, and its con- struction made the cost of the cable road much greater than that of an electric road. Grand Avenue Railway Co. v. Poe pie's Raihvay Co , 11 S. V. Rep. 472 (Mo.). It is fairly well settled that a city, in the absence of express legislative enactment, has no power to grant exclusive street railway rights to a single corporation. New Or- leans V. Crescent R. R. Co., 12 Fed. Rep. 308. It would seem logically to follow that, when a city gives a railway company the right to use the tracks of another company, it exercises a reserved right rather than the right of eminent domain. This view has been adopted in Missouri. Union Depot R. R. Co. v. Siuthern R. R. Co., 100 Mo. 562. The question presented in the principal case therefore is not one of damages for con- demnation of property under eminent domain, but a question simply of what is "just compensation" for the use of the tracks by the electric road. The exact question here presented does not seem to have arisen before, but the decision, it is submitted, is sound. Of course, there is a strong argument that, as the electric road does not use the conduit, it ought not to be made to pay for the use. The answer is that, though
