Part 3

If an obstruction exists on the right-hand side of a highway, the driver of a car may be justified in passing to the other side, and in driving along that side until he has passed the obstacle. Under such circumstances he has a right to be on the left side temporarily; and if he exercises the proper degree of care while there, is not liable for injuries arising from a collision with another traveler. But if the obstruction is merely temporary, it may be the duty of the driver to wait for the removal and not to pass on the wrong side of the highway.

An automobilist must exercise reasonable or ordinary care to avoid injury to other persons using the highway. What this is depends on many circumstances, and each case to some extent is decided by its own facts. Consequently thousands of cases have already arisen, and doubtless they will still multiply as long as automobiles are used and their users are negligent.

The competency of the driver is one of the unending questions. Of course he should be physically fit, not subject to sudden attacks of dizziness, possessing sufficient strength and proper eyesight and a sober non-excitable disposition. It is said, that a chauffeur is not incompetent who requires glasses. But he certainly would be if his eyesight was poor and could not be aided by the use of them.

The driver must at all times have his car under reasonable control so that he can stop in time to avoid injury. He must keep a reasonably careful lookout for other travelers in order to avoid collision; also for defects in the highway. If by reason of weather conditions, lights or other obstructions, he is unable to see ahead of him, he should stop his car. If there be no facilities for stopping for the night, a driver is not negligent should he proceed through the fog.

Passing to the liability of the owner of a car for the acts of his chauffeur, the general rule is, he is then liable when the chauffeur is acting within the scope of his owner's business. When the owner himself is riding in the car there is less difficulty in fixing the liability, but when the chauffeur uses the car without the owner's consent, he is not liable for the conduct of the driver. And this is especially so in using a car contrary to the owner's instructions and for the chauffeur's pleasure; or in using it for his own business with the owner's consent. And the same rule generally prevails whenever a member of a family uses his parent's car without his knowledge and consent, and especially when forbidden. But the parent is liable for the running of a car with his knowledge by a member of his family and for the convenience or pleasure of other members. See _Chauffeur_; _Garage Keeper_.

=Bailor and Bailee.=--To create this relation the property must be delivered to the bailee. Though a minor cannot make such a contract, yet if property comes into his possession he must exercise proper care of it. Should he hire a horse and kill the animal by rash driving, he would be liable for its value. A corporation may act as bailor or bailee, and an agent acting therefor would render the corporation liable unless he acted beyond the scope of his authority.

Suppose one picks up a pocketbook, does he become the owner? Is he a bailee? Yes, and must make an honest, intelligent effort to find the owner; if failing to do so, then he may retain it as his own, meanwhile his right as finder is perfect as against all others. Should the true owner appear, whatever right the finder may have against him for recompense for the care and expense in keeping and preserving the property, his status as finder does not give him any lien unless the owner has offered a reward to whoever will restore the property. To this extent a lien thereon is thereby created.

The statutes generally provide what a person must do who has found lost property. Suppose a person appears who claims to be the owner of the thing found, what shall the finder do in the way of submitting it to his inspection? In one of the recent cases the court decided that it was a question of fact and not of law whether the finder of lost property had given a fair and reasonable opportunity for its identification before restoring it, and whether the claimant should have been given an opportunity to inspect it in order to decide whether it belonged to him.

The finder does not take title to every article found and out of the possession of its true owner. To have even a qualified ownership the thing must be lost, and this does not happen unless possession has been lost casually and involuntarily so that the mind has no recourse to the event. A thing voluntarily laid down and forgotten is not lost within the meaning of the rule giving the finder title to lost property; and the owner of a shop, bank or other place where the thing has been left is the proper custodian rather than the person who was the discoverer.

If a lost article is found on the surface of the ground, or the floor of a shop, in the public parlor of a hotel, or near a table at an open-air place of amusement, or in the car of a railroad it becomes, except as against the loser, the property of the finder, who appropriates it regardless of the place where it was found. Once a boat was found adrift and the finder made the needful repairs to keep it from sinking, yet the owner was mean enough to refuse to pay for them. The court compelled him to make good the amount to the finder.

The law regards the possession of an article which is lost as being that of the legal owner who was previously in possession, until the article is taken into the actual possession of the finder. If the finder does not know who the owner is and there is no clue to the ownership, there is no larceny although the finder takes the goods for himself and converts them to his own use. If the finder knows who the owner is or has a reasonable clue to the ownership, which he disregards, he is guilty of larceny.

Another class of cases must be noticed. Very often articles are delivered to another to have work done on them, hides to be tanned, or raw materials to be worked up into fabrics. Can a creditor of the bailee pounce on tanned hides or completed fabrics as belonging to him and take them in satisfaction of his debt? Both parties have in truth an interest in the goods, and in general it may be said that the bailor cannot thus be deprived of his interest and may follow the goods and recover them or their value.

If they are destroyed while executing the agreement, who must lose? If the bailee is not negligent or otherwise at fault, and the loss happened by internal defect or inevitable accident, the bailor would be the loser. And if workmen had been employed thereon, the bailor would also be obligated to pay for their labor.

To what extent can a bailee limit his liability by agreement? A bailee who was a cold storage keeper, stated in his receipt "all damage to property is at the owner's risk." This limitation related, so a court decided, to loss resulting from the nature of the things stored. A bailee received some cheese and gave a receipt slating that it was to be kept at the owner's risk of loss from water. It was injured from the dripping of water from overhead pipes. The bailee was, notwithstanding his receipt, held liable.

A bailor need not always be the owner of the thing bailed. He may be a lessee, agent, or having such possession and control as would justify him in thus acting. He should give the bailee notice of all the faults in the thing bailed that would expose him to danger or loss in keeping it. For example, if it were a kicking horse, he should warn the bailee to keep away from his legs.

The courts have been often troubled about the degree of care required of bailees, as it differs under varying circumstances. A bank that permits a depositor to keep a box of jewelry or silver in its vault for his accommodation, while absent from home and without receiving any compensation therefor, is not required to exercise the same degree of care as a safe deposit company whose chief business is to do such things and is paid for its service. Nevertheless a bank must exercise reasonable care, such care as is used in keeping its own things.

Suppose your package is stolen by the cashier or paying teller, is the bank responsible? That depends. If the bank knows or suspected the official was living a gay life, it ought not to keep him, and most banks would not. It is the better legal opinion, that a bank ought not to keep a president, cashier or other active official who is speculating in stocks, for the temptation to take securities not belonging to them has been too great in many cases for them to withstand. On the other hand if a long-trusted official, against whom no cause for suspicion had arisen, should steal a package from the safe, the bank would not be responsible for the loss any more than if it had been stolen by an outsider. The bank did not employ him to steal, but to perform the ordinary banking duties.

A bailee is usually a keeper only. But the nature of the property may require something more to be done. If he is entrusted with a milch cow, he must have her milked, or with cattle in the winter time which require to be served with food, he must supply it, otherwise they would starve. If he is keeping a horse which is taken sick, proper treatment should be given.

When the period of bailment is ended, the thing bailed must be returned. If it consisted of a flock of sheep, cattle and the like, all accessions must also be delivered. In many cases the bailee is not required to return the specific property, but other property of the same kind and quality. Thus if one delivers wheat for safekeeping, which is put in an elevator, the contract is fulfilled by delivering other wheat of similar kind and quality; or, if the wheat is to be made into flour, by delivering the proper amount of the same quality as the specific wheat bailed. A bailee has a lien for his service and proper expenditures in caring for and preserving the thing bailed, but not for any other debt the bailor may owe him. And if the bailee is a finder who has bestowed labor on the article found in good faith, the same rule applies.

Agisters and livery-stable men have no lien at common law, like carriers for keeping the animals entrusted to them because they are under no obligation to take them into their keeping. In Pennsylvania a different rule was long ago declared, and has ever since been maintained. As he can agree on terms, he may make such as are agreeable to both parties. Elsewhere he can impose his own terms, and may demand his pay in advance, or create, by contract, a lien if he pleases. A person who is hired as a groom to a horse for a specified time and at a fixed price, has no lien on the horse for his service, but has a lien for feed, keeping and shoeing, which should have been furnished by the owner. A contract to do this is not necessary to create the lien, it arises as if the horse had been left for keep and care without saying more.

=Bankruptcy.=--Before the enactment of the federal Bankruptcy Act of 1898, every state had a bankruptcy act of its own, which was generally called an insolvency law. The federal act has superseded these by virtue of the power granted to congress in the federal constitution "to establish uniform laws on the subject of bankruptcies throughout the United States."

The United States district courts in the several states are made courts of bankruptcy and have power to adjudge all persons bankrupt who have their principal places of business, residence and domicile within their respective districts; and jurisdiction also over others who simply have property within their jurisdiction.

Any person who owes debts, or business corporation, may become a voluntary bankrupt. So may an alien. He may also become an involuntary bankrupt if he has had his principal place of business here, or has been domiciled within the jurisdiction of the court for the preceding six months, or has property within its jurisdiction. Some corporations are still denied voluntary action, as well as minors and insane persons.

Who may become an involuntary bankrupt? Any person, except a wage-earner, or farmer, any unincorporated company, and any corporation engaged principally in manufacturing, trading, printing, publishing, or mercantile pursuits, owing debts to the amount of one thousand dollars. What is a manufacturing corporation, within the meaning of the law, is not even yet fully known. A corporation engaged principally in smelting ores is one; and a mining corporation, whose principal business is to buy and sell ores, is deemed a trading corporation and may become an involuntary bankrupt.

Next we may inquire, what are acts of bankruptcy? One of them is an admission of a person's inability to pay his debts. And this may be done by a corporation through its properly organized officers. Another act of bankruptcy is to convey, transfer, conceal or remove property with the intention to defraud creditors. And by concealment is meant the separation of some tangible thing like money from the debtor's estate, and secrete it from those who have a right to seize it for payment of their debts. The transfers of property covered by the act are those which the common law regards as fraudulent. If, for example, at the time of the transfer of his property one is so much indebted that it will embarrass him in paying his debts, the transfer will be deemed fraudulent; but a voluntary transfer, made by one who is free from debt, cannot be impeached by subsequent creditors. The intention to hinder, delay or defraud creditors is a question of fact to be ascertained by proper judicial inquiry.

A general assignment for the benefit of creditors is an act of bankruptcy. Likewise a general assignment for the benefit of creditors made by the majority of the board of directors and of the stockholders is an act of bankruptcy. A petition for the appointment of a receiver of a corporation under a state statute is not an assignment for the benefit of creditors and therefore is not an act of bankruptcy.

Another act of bankruptcy is to suffer or permit, when one is insolvent, any creditor to acquire a preference through legal proceedings. The term preference includes not only a transfer of property, but also the payment of money within four months from the time of filing his petition in bankruptcy. It is immaterial to whom the transfer is made if the purpose be to prefer one creditor to another. Like a fraudulent transfer the intent to prefer must be proved, though this may sometimes be presumed, as when the necessary consequence of a transfer or payment made by an insolvent debtor is to liquidate the debt of one creditor to the entire or partial exclusion of others.

Passing to the filing of the petition a voluntary petitioner should file his petition in the court of bankruptcy in the judicial district where he has principally resided for the preceding six months. When there is no estate and no claim has been proved and no trustee has been appointed, a bankrupt may withdraw his petition on paying the costs and expenses. The petition must be accompanied by a schedule of the petitioner's property, showing its kind and amount, location, money value, and a list of his creditors and their residences when known, the amount due to them, the security they have, and a claim to legal exemptions, if having any. After filing a voluntary petition the judge makes an adjudication. He may do this ex parte, that is without notice to creditors.

A petition may be filed against a person who is insolvent and has committed an act of bankruptcy within four months after such action. Three or more creditors who have provable claims amounting to five hundred dollars in excess of securities held against a debtor may file the petition, or if all the creditors are less than twelve, then one of them may file the petition provided the debtor owes him the above stated amount. Creditors holding claims which are secured, or have priority, must not be considered in determining the number of creditors and the amount of claims for instituting involuntary proceedings. The petition should state the names and residences of the petitioning creditors, also that of the bankrupt, his principal place of business, the nature of it, his act of bankruptcy, that it occurred within four months of the filing of the petition, and that the amount of the claims against him exceed five hundred dollars. The petition must be signed and properly verified, and may be afterward amended for cause in the interest of justice. On the filing of the petition a writ of subpoena is issued addressed to the bankrupt commanding him to appear before the court at the place and on the day mentioned to answer the petition. The next step, after serving the petition, is for the bankrupt to file his answer. Meanwhile his property may be seized by a marshal or receiver on proof that he is neglecting it or that it is deteriorating.

Within ten days after one has been judicially declared to be a bankrupt, he must file in court a schedule of his property, including a list of his creditors and the security held by them. Then follows the first meeting of the bankrupt's creditors, within thirty days after the adjudication. The judge or referee must be present at this meeting, also the bankrupt if required by the court. Before proceeding with other business the referee may allow or disallow the claims of creditors presented at the meeting, and may publicly examine the bankrupt, or he may be examined at the instance of any creditor. At this meeting the creditors may elect a trustee.

Subsequent meetings may be held at any time and place by all the creditors whose claims have been allowed by written consent: the court also may call a meeting whenever one fourth of those who have proved their claims file a written request to that effect.

Only a creditor who owns a demand or provable claim can vote at creditors' meetings. Nor can other creditors through filing objections to a claim prevent a bona fide claimant from voting. A creditor of an individual member of a bankrupt partnership cannot vote. Nor can creditors holding claims that are secured or that have priority vote only to a limited extent, so far as their claims are on the same basis as other creditors. To entitle secured and preferred creditors to vote at the first meeting on the whole of their claims, they must surrender their securities or priorities. If a portion of a creditor's debt is secured and a portion is unsecured, he may vote on the unsecured portion. An attorney, agent, or proxy may represent and vote at creditors' meetings, first presenting written authority, which must be filed with the referee. The referee who presides at the first meeting makes up or decides on its membership. Matters are decided at the meeting by a majority vote in number and amount of claims of all the creditors whose claims have been allowed and are present.

The next stage in bankruptcy proceedings is the proving and allowance of claims. Only such debts are provable as existed at the time of filing the petition. Every debt which may be recovered either at law or in equity may be proved in bankruptcy. A claim barred by the statute of limitations is not provable, nor is a contingent liability. On the other hand a debt founded on a contract express or implied may be proved, for example, damages arising from a breach of a contract prior to the adjudication in bankruptcy. Again, if there are agreements or covenants in a contract of a continuing character the bankrupt is still liable on them notwithstanding his discharge in bankruptcy. If the amount of a claim is unliquidated the act sets forth the mode of proceeding. Among other claims that may be proved are judgments, debts founded on an open account, and rents.

The claims of creditors who have received preferences are not allowed unless they surrender them. Thus money paid on account by an insolvent debtor must be surrendered before a claim for the balance due on the account can be proved. If proceedings are begun by the trustee to set aside a preferential transfer to a creditor who puts in a defense, he cannot thereafter surrender his preference and prove his claim. If a creditor in proving his debt fails to mention his security, if he has any, he will be deemed to have elected to prove his claim as unsecured.

Claims that have been allowed may be reconsidered for a sufficient reason and reallowed or rejected in whole or in part, as justice may require, at any time before the closing of the estate. The reëxamination may be had on the application of the trustee or of any creditor by the referee, witnesses may be called to give evidence, and the referee may expunge or reduce the claim or adhere to the original allowance.

The appointment of the trustee by the creditors at their first meeting is subject to the approval or disapproval of the referee or the judge. Should the creditors make no appointment the court appoints one. As soon as he has been appointed it is the duty of the referee to notify him in person or by mail of his appointment. If he fails to qualify or a vacancy occurs, the creditors have an opportunity to make another appointment. If a trustee accepts he must give a bond with sureties for the faithful performance of his duties. He may also be removed for cause after notice by the judge only. Should he die or be removed while serving, no suit that he was prosecuting or defending will abate but will be continued by his successor.

The trustee represents the bankrupt debtor as the custodian of all his property that is not exempt; also the creditors, and gathers all the bankrupt's property from every source and protects and disposes of it for the best interests of the creditors, and pays their claims. In short, he succeeds to all the interests of the bankrupt, is an officer of the court and subject to its orders and directions. He must deposit all moneys received in one of the designated depositories, can disburse money only by check or draft, and at the final meeting of the creditors must present a detailed statement of his administration of the estate. During the period of settlement he must make a report to the court in writing of the condition of the estate, the money on hand, and other details within the first month after his appointment, and bi-monthly thereafter unless the court orders otherwise.

The federal Bankruptcy Act prescribes what property passes to the trustee and also what is exempt. Whatever property on which a levy could have been made by judicial process against the bankrupt passes to the trustee. On the other hand, the income given to a legatee for life under a will providing it shall not be subject to the claims of creditors does not pass to the trustee. If the bankrupt has an insurance policy with a cash surrender value payable to himself or personal representatives he may pay or secure this sum to the trustee and continue to hold the policy. And a policy of insurance payable to the wife, children, or other kin of the bankrupt is no part of the estate and does not pass to the trustee.