are paramount to the shareholder's interests,10 the merits of each claim against the corporate assets would have to be collaterally determined to ascertain how much, if any, plaintiff has been damaged. In short, a thorough accounting of the corporation's finances would be in order. On the other hand, let the corporation itself sue, and the amount recovered be paid into its treasury: procedure will be simple, and the result equitable. This alone should be sufficient relief for the stockholder.

Nevertheless, if by reason of some collateral facts the shareholder is independently entitled to legal protection against this indirect harm, should that enable recovery for injury which primarily affects the property of another legal unit? The Appellate Division gives an affirmative answer where the shareholder is independently entitled by virtue of the relationship of corporation and director, which imposed a duty on the director not to connive at waste of assets of another corporation in which the plaintiff is a shareholder. Analogous cases would be those of cestui and trustee, agent and principal, and cases where the director expressly contracted with a stockholder not to waste corporate assets. Yet do not considerations of convenience continue to operate against recovery? The same comprehensive financial investigation would be necessary to ascertain this plaintiff's award. Likewise nothing could deter actions by such other shareholders as could invoke the benefit of the doctrine of this case, or by the subsidiary corporation itself in its own right based on defendant's connivance in the defalcation, certainly on behalf of creditors and uncompensated shareholders, if not for the whole extent of the wrong.11

The principal case thus presents circumstances to which the rule of Smith v. Hurd could profitably be extended. Perfect justice would be attained with relative facility by requiring that the plaintiff make the subsidiary corporation a party in any action he brings, and thus its rights, and consequently the derivative rights of shareholders and creditors, would be fully and at once adjudicated. These considerations would not apply, however, to circumstances less fortunate for the subsidiary corporation under which it would be remediless against this defendant, as, for instance, had he merely acquiesced, instead of colluded, in the misappropriation. As the plaintiff would then have no derivative redress, it would be unjust not to determine the defendant's liability to him in a direct action, and the difficulty of computing damages should not be heard in defense.12

of such negligence, by which the shares are diminished in value fifty, ten, five, or one per cent."

10 Cf. 2 MORAWETZ, CORPORATIONS, 2 ed., §§ 818 et seq.; 4 THOMPSON, CORPORATIONS, 2 ed., §§ 4990 et seq.

11 Shaw, C. J., in Smith v. Hurd, supra, 386: “It is obvious to remark that a judgment in favor of one stockholder would be no bar to an action by a creditor, nor a judgment by both, to an action by the corporation."

12 It would seem that as an essential element of his complaint plaintiff should aver facts establishing the non-liability of defendant to the subsidiary corporation. Should defendant make a bonâ fide denial of such non-liability, the proper procedure apparently would be for the court to stay plaintiff's suit until the corporate right be asserted and tested against defendant. If judgment should be against defendant, this suit would be dismissed. If in his favor, this suit would proceed.

RIGHT TO A NEW TRIAL AFTER THE EXPIRATION OF THE TERM. Where a man has been convicted of a crime, and later-discovered evidence tends to show that his conviction was improper, either on the merits, or because the jury was prejudiced, one would naturally suppose that he would be granted a new trial. A recent decision of the United States Supreme Court, however, declares that unless the request for a new trial was made before the expiration of the term at which the judgment of conviction was entered, this relief is impossible. United States v. Mayer, 235 U. S. 55. In that case, after the end of the term, it was discovered that one of the jurymen who served at the trial had been prejudiced against the defendant. It was nevertheless held that a new trial could not be granted, since with the expiration of the term the court. had lost all control over the judgment.

Unquestionably, the general rule at common law was that a judgment. could not be altered by the court which granted it after the expiration of the term at which it was granted. To this rule the law recognized but three exceptions. Clerical errors could be corrected at any time.3 By a writ of audita querela, relief might be had against the consequences of a judgment on account of some matter of defense, which had arisen since its rendition, and which could not have been taken advantage of otherwise. Writs of error coram nobis were allowed to bring to the attention of the court errors of fact in the procedure not appearing on the face of the record, unknown to the court, and which if known in season would have prevented the judgment. These writs were generally limited to situations where, unknown to the court, one of the parties to the judgment had died before it was rendered, or was an infant, a feme covert, or insane.6 Thus, where the grounds for the relief asked were newly discovered evidence or partiality of the tribunal, the law afforded no remedy. In such cases, however, equity in its jurisdiction to enjoin judgments obtained through fraud, accident, or mistake would compel a new trial at law to prevent an inequitable use of a legal right. Modern statutes have to some extent remedied this defect in the law by providing that within a prescribed time, generally one, two, or three years after

1 For a statement of the case, see p. 434 of this issue of the REVIEW.

8

2 Bank of United States v. Moss, 6 How. (U. S.) 31; Ex parte Sibbald, 12 Pet. (U. S.) 488; Phillips v. Negley, 117 U. S. 665. BLACK, JUDGMENTS, § 306; FREEMAN, JUDGMENTS, 896. The somewhat elusive reason given for this rule was that "during the term, the record remaineth in the breast of the judges; but when the term is past, then the record is in the roll and admitteth no alteration, averment, nor proof to thecontrary." CO. LITT., 260 (a).

3 Philips v. Smith, 1 Stra. 136.

This is not a true exception, since the judgment. is not altered. The record alone is altered, to make it conform to the judgment in fact rendered.

4 3 BL. Com., 405, 406; see Avery v. United States, 12 Wall. (U. S.) 304.

5 United States v. Plumer, 3 Cliff. 28; Adler v. State, 35 Ark. 517; State v. White, 75 Mo. App. 257; see Asbell v. State, 62 Kan. 209.

6 See Brunsen v. Shulten, 104 U. S. 410, 416; Adler v. State, supra; Howard v. State, 58 Ark. 229. The more summary method of procedure by motion has now generally taken the place of these old forms. See Harris v. Hardeman, 14 How. (U. S.) 334; 3 BL. COM., 406; FREEMAN, JUDGMENTS, § 94.

7 Since the error was not in the record, no aid could be obtained from a higher court by appeal or otherwise.

8 Tovey v. Young, Prec. Ch. 193; Platt v. Threadgill, 80 Fed. 192; Marine Ins.. Co. v. Hodgson, 7 Cranch (U. S.) 332; 4 POMEROY, EQ. JUR., 3 ed., § 1364..

the entry of the judgment, the court may on motion grant a new trial on various grounds, generally including prejudice of the jury and newly discovered evidence. But since these statutes do not as a rule cover criminal cases,10 and since equity has always refused to interfere in criminal cases where no property rights are involved," the defendant in the case under discussion is without redress. His only hope lies in a pardon. This is obviously an inadequate and cumbersome remedy.12 The executive has not the proper procedure for hearing and determining the merits of the question. From the point of view of the defendant, it is unjust, since he has the burden of proving his innocence to the executive, whereas, until justly convicted, he should be entitled to a presumption of innocence. And, further, he is denied an opportunity to prove that he has been unjustly accused. From the point of view of the state, the defendant should not be set at liberty until an impartial jury has acquitted him on the merits of the case. Thus the granting of a new trial can alone secure the rights of all parties.

Moreover, in this respect a sharp distinction should be noted between civil and criminal cases. In the former, it is clearly to the interest of the community that there be a definite time after which a judgment cannot be altered. Otherwise title to property would be insecure, and business would be unreasonably hampered. In criminal cases, on the other hand, no property rights can be prejudiced by altering the judgment at any time. The state is simply exacting punishment, and the life and liberty of the accused are at stake. It indeed seems a very mockery of justice to deny relief to one thus unjustly convicted on the mere technicality that the term has expired.13 This gap in the law has been supplied in England by a statute creating a separate court for criminal appeals and giving to it a wide discretion in granting new trials at any time and on any grounds.14 It is submitted that such legislation reaches an eminently satisfactory result, and should be followed in the United States.

THE FIVE PER CENT CASE AGAIN. Seemingly, rate problems, like the heads of the Hydra, are no sooner disposed of than they return twofold to plague their assailant. Upon a rehearing of the Five Per Cent Rate Case the Interstate Commerce Commission have modified their original decision. The Five Per Cent Case, 32 I. C. C. 325.1 The Com

9 See 4 POMEROY, EQ. JUR., 3 ed., § 1365; Fuller v. United States, 182 U. S. 562; KY. CODES, § 344; BURNS' ANNOTATED IND. STATUTES, §§ 585, 587, 589. 10 See Klink . People, 16 Colo. 467; Howard v. State, supra.

11 Kerr v. Corporation of Preston, 6 Ch. D. 463; Portis v. Fall, 34 Ark. 375; see I POMEROY, EQ. JUR., 3 ed., § 197. In a few exceptional cases, equity has interfered in criminal proceedings to protect property rights. Iron Works v. French, 12 Abb. N. C. 446.

12 See Sanders v. State, 85 Ind. 318.

13 Where the grounds for relief were known at the time judgment was entered, a limitation on the time within which to bring the motion may be perfectly just. 14 7 Edw. VII., c. 23.

1 Cf. The Five Per Cent Case, 31 I. C. C. 551. For a résumé of this first decision, see 28 HARV. L. Rev. 97. On September 19, 1914, the Commission ordered, "That

mission cannot properly be said to have reversed itself, for, as they point out, the events which have occurred since the original decision present a new situation. In the face of that situation the majority of the Commission deemed it necessary to extend the relief granted in the original decision. This they have done by extending the authorization of a five per cent increase in freight rates, there accorded only to the roads in Central Freight Association territory,2 to the entire territory east of the Mississippi and north of the Ohio except the New England states. And, whereas certain classes of freight were excepted from the operation of that decision, the only exceptions now made are railand-lake rates, rates on bituminous and anthracite coal, coke, and iron ore, and rates already fixed by unexpired orders of the Commission.* The rates on cement, starch, brick, tile, clay, and plaster, specially excepted from the prior increases, are now subject to a five per cent increase throughout this territory.

It will be recalled that in their original report the Commission were unanimous in the opinion that the revenues of the railroads in official classification territory were insufficient, but that the majority of the Commission were of the opinion that, except as to the roads in Central Freight Association territory, a horizontal increase in freight rates was neither a necessary nor proper remedy for the situation, and they suggested ten other sources of additional revenue for the petitioning carriers. The considerations which prevailed upon a majority of the Commission to alter this decision were, first, the fact that the needs of the railroads were greater than had been anticipated, as evidenced by subsequent returns; second, the increased difficulties in the way of meeting these needs occasioned by the European war; third, the fact that the remedial measures suggested by the Commission in July were not adapted to meeting such a sudden contingency.

The completed returns for the fiscal year ending June 30, 1914, showed

further hearing in said cases be, and is hereby, granted; said hearing to be limited to presentation of facts disclosed and occurrences originating subsequently to the date upon which the records previously made in these cases were closed."

2 That part of the United States lying between the Ohio River and the lakes from the Mississippi to the Atlantic seaboard is known as official classification territory. For rate purposes it is divided into three sections: the New England states; the territory between the Atlantic seaboard and Buffalo and Pittsburg, known as trunk line territory; and the territory from Buffalo and Pittsburg to the Mississippi, known as Central Freight Association territory.

3 Intra-territorial rates in New England were already being cared for by a thorough readjustment of interstate and intrastate rates carried out with the approval of the various state commissions in that territory. The only authorized increases in New England, therefore, were such as might be necessary to preserve the existing differentials between New England points and points in trunk line territory. The authorized increases in official classification territory generally were not confined to intra-territorial rates, but extended also to joint rates between official classification territory and outside points, provided no increase should exceed five per cent of the official classification carrier's portion of the rate. By a supplementary order the Commission has also permitted the railroads to increase some rates more than five per cent where necessary to preserve existing differentials.

4 The rates here enumerated had either been recently increased, or proposed increases were under consideration by the Commission in other proceedings. See 32 I. C. C. 331.

See 31 I. C. C. 551; 28 HARV. L. Rev. 97.

the net operating revenues of the railroads in official classification territory to be lower than in any year since 1908, while the property investment had increased by over $1,300,000,000 since that year. And the additional returns for the succeeding months of July, August, and September showed that the downward trend of revenues had by no means run its course.

The blow which the war in Europe struck our industry and commerce is too well known to need amplification here. The railroads in official classification territory must refund loans aggregating over $500,000,000 within the next three years. In view of the enormous European investment in American railroads, and the effect which this great war must have upon the amount of capital available in the next few years and the rate of interest which it will command, it can scarcely be doubted that these railroads must suffer severely from the effects of that conflict. The dissenting commissioners were not inclined to quarrel with these findings, but they doubted the legality and propriety of the Commission's changing its original decision because of them. Their attitude was, briefly, if this increase was unreasonable in July when the railroads admittedly needed increased revenue, how can the fact of a war in Europe and the fact that the needs of the railroads are greater than had been anticipated make this increase reasonable in December? Commissioner Harlan was inclined to the opinion that the Commission had no legal right or power to be governed in its regulation of rates "by conditions presumably temporary in their nature."

7

However this may be, it would be unfortunate in the extreme if the Commission had no power to afford temporary relief to the railroads in an emergency. The real danger, as pointed out by both Commissioners Harlan and Clements, is that this temporary relief will be hailed (as, indeed, it seems to have been hailed by many financial journals) as a permanent dispensation and the real remedies urged by the Commission in its original decision cast aside. No sensible merchant, who found his profits steadily declining, would think of making a blanket increase of five per cent in the prices of all his wares. The only permanently efficacious remedy for the general railroad situation would seem to be a thorough revision of rates and redistribution of charges, with an increasing attention to economy and efficiency in railroad management. By these means alone can the Hydra's wounds be cauterized and the Herculean task accomplished.

8

MILITARY TRIALS OF CIVILIANS IN TIMEs of Peace. Not long ago a storm of justifiable protest arose at the action of military authorities in West Virginia in trying and sentencing rioting strikers before military tribunals, without jury. The fact that this action was

6 See 32 I. C. C. 325, 335.

7 See 32 I. C. C. 325, 335.

8 Public hearings will commence this month upon a petition for a general increase of rates by the roads west of the Mississippi River. But the western roads are not asking for a horizontal increase in all rates, but propose a general overhauling of rates with advances ranging from two to thirty per cent according to traffic conditions.