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CONTRACT.

court to determine whether certain admitted or and the bank pass by the grant, and the riparian clearly proven facts constituted probable cause. owner cannot be divested by a subsequent survey (Smith v. Liverpool & London & Globe Ins. Co., of the islands. (Grand Rapids & I. R. Co. v. But[Cal.], 40 Pac. Rep. 540.)

ler (U. S. S. C.), 15 S. C. Rep. 991.) MASTER AND SERVANT-NEGLIGENCE-EVIDENCE. TRUST DEED-POWER OF SALE. -A trust deed of -A night watchman was found dead under an un

land provided for a sale on default, “as in cases of railed bridge connecting two buildings, which he foreclosing mortgages, by bill in chancery, by some customarily crossed in the performance of his suitable person, to be appointed in writing by any duties. Ielil, in an action to recover damages for

person interested in such trust fund." Ilelil, that a his death, evidence was admissible which tended to show what kind of a man he was in respect to sale under judicial process, by a person appointed

conveyance to a purchaser at a sale conducted as a health, vigor, activity and sobriety, and his bodily in writing by one interested in the debt, conveyed mental peculiarities. (Overman Wheel Co.

to him the legal title. (Lang v. Stansel (Ala.], 17 Griffin (U. S. C. C. of Ap], 67 Fed. Rep. 659.)

South. Rep. 516.) MORTGAGE -TRUST DEED—INJUNCTION.—The existence of a lien for a small paying tax is not such a cloud on the title as to warrant the enjoining of a

Correspondence. sale under a deed of trust given for the price thereof, as the trustee can be compelled to pay the

KARLSBAD, AUSTRIA, August 5, 1895. tax out of the purchase money. (Patch v. Morrisett (Va.], 22 S. E. Rep. 173.)

Editor of the Albany Laro Journal : MUNICIPAL CORPORATION

- A con

It is well known that in England Commercial tract between a city and a water company provided and Business Companies, in fact, nearly all Corporathat the latter should put in such further number of

tions for Profit, are organized under what are fire hydrants upon street mains as may be ordered known as the Companies Acts. The general prinby said city council, “provided that the cost and ciples on what the legislation embodied in those expense of all such further number of hydrants and

acts is founded, and the beneficial effect thereof to of the putting in of the same shall be paid by said England are well set forth in the following article city." Held, that the city was liable only for the in the London Times of August 3d instant. actual sum expended by the company in putting in such hydrants, and not for what such work was

THE COMPANIES ACTS. reasonably worth. (Bull v. City of Quincy (III.), 10

The report of the departmental committee apN. E. Rep. 1035.)

pointed by the Board of Trade " to inquire what PARTNERSHIP CONTRACT BY ONE PARTNER. —

amendments are necesssary in the acts relating to The general rule is, that one partner has no implied joint-stock companies incorporated with limited authority to bind the firm by an instrument under liability,” has been published. The report is of seal, but where such an instrument has been exe considerable length and an addendum follows it, in cuted by one partner in the firm name, in the scope wlich Mr. Justice Vaughan Williams gives reasons of the partnership business, it may be ratified by for dissenting from some of the conclusions of his the other partners by prior or subsequent oral as- colleagues. The appendix to the report consists of sent, or by implication from acts or declarations of

two parts. Part I. contains evidence supplied by such partners. (Tischler v. Kurtz (Fla.), 17 South. various persons and public bodies as to matters on Rep. 661.)

which the committee desired information; suggesPARTNERSHIP

tions from various persons or bodies as to changes CEIVER. A receiver of the insolvent estate of one in the existing law; and also the judgments in a member of a copartnership cannot maintain an ac certain important case.

Part II. consists of the tion to set aside as preferential a conveyance of real draft bill prepared by the committee. and personal property belonging to a copartnership Experts in company law will, doubtless, have and of its assets, given to secure il firm debt. much to say on the draft bill recommended by the (Masterman v. Lumberman's Nat. Bank of Stillwater committee. Many suggestions that have been [Minn.], 63 N. W. Rep. 723.)

eagerly pressed by reformers, have been put aside PUB!IC LANDS

as impracticable. In particular, the committee have Where the government grants lands on the banks not seen their way to approving of the establishof a fresh-water stream, without reservation, in ment of the principle of compulsory reserve liaStates where the common law prevails, all unsur-bility, which, however, is strongly supported by veyed islands between the middle line of the stream Mr. Justice Vaughan Williams. Neither do they

INSOLVENCY

ACTION BY RE

GRANTS

RIPARIAN RIGHTS. —

recommend a revival of the old practice of double companies in France, anonymes and en commandite, registration, though they endeavor to secure some was, in December, 1894, calculated approximately of the advantages of that system by enlarging the at £420,000,000. The capital of German companies powers of the “statutory” meeting and providing was estimated by Mr. Gerb, of her Majesty's Consuthat it shall be held earlier than at present. On the late-General in Berlin, at £200,000,000, but Mr. other hand they recommend that every prospectus Schuster puts it at £300,000,000. The capital emshall mention a definits sum to be subscribed before barked in English companies, therefore, exceeds the company shall proceed to allotment. • They have that represented by French and German companies also inserted clauses declaring the law as to the together by at least £315,000,000. The number of duties and liabilities of promoters and directors, persons who are interested, either as shareholders and a clause requiring disclosure to be... made in or bond or debenture holders, in these companies every prospectus inviting subscription to shares or is, of course, enormous. It is obvious that legisladebenturs of certain defined matters, among others, tion affecting interests of this magnitude and wideof the name of the real vendor and the amount of spread character demands great caution and care. purchase-money payable to him. They repeal the Restrictive provisions, which may have the effect of well-known “section 38 ” of the act of 1867, pro- either curtailing the facilities for the formation of viding for the disclosure of contracts, the effect of companies which bring so much business to Engwhich is now almost invariably evaded by the inser- land, or of embarrassing the administration of comtion of a waiver clause in prospectuses. The panies, or deterring the best class of men from becommittee hope to get the results contemplated coming directors, are not to be lightly entertained. when clause 38 was devised by other means, includ On the other hand, it must be generally acknowling a general sub-section to clause 14, relating to edged that a person who is invited to subscribe to information required to be stated in prospectuses. a new undertaking has practically no opportunity The committee recommend that the payment of of making any independent inquiry before coming commissions for underwriting capital and for some to a decision. Indeed, the time usually allowed other purposes be legalized under certain conditions. between the issue of the prospectus and the making

Having given a brief outline of some of the of an application does not permit of any real investileading features of the new draft bill devised by gation. The maxim of caveat emptor has, in the the committee, we conclude by quoting a paragraph opinion of your committee, but a limited application in the report which lays down the general princi in such cases.- London Times, August 3, 1895. ples of the legislation which the committee have Carefully considered there is here a valuable adopted. They say:

lesson for the State and especially the city of New Before inquiring into the typical forms of fraud York, which is the commercial center of the United against which further protection is sought or the

States as London is of Great Britain. Many of the nature of the remedies to be applied, it is convenient restrictive provisions in the existing corporation to consider shortly the general lines upon which, laws of New York are unwise, and have, as I know and the limits within which, the Legislature can

and as everybody knows who is familiar with their safely or usefully interpose. It is a trite observation effect, driven large amounts of capital out of the that legislation cannot protect people from the con

State. The laws ought to be so modified and sequences of their own imprudence, recklessness, or

liberalized as that New York capital might under want of experience. The Legislature cannot supply New York organizations carry on business of all people with prudence, judgment, or business habits.

kinds, not only in other States, but in every part of It must be remembered that the majority of com

the world. panies are honestly formed for carrying on a legiti

The direct inheritance tax imposed in New mate, though it may be a speculative, enterprise or

York, but not in the neighboring States, combined business, and the business is conducted with honesty with unequal and therefore unjust taxation of the and reasonable ability and judgment. In conse- personal property of deceased persons, operating in

connection with its short sighted corporation laws guence partly of the facilities which exist for the formation of companies in this country, a vast

are inflicting upon the State incalculable injuries, amount of foreign enterprise and foreign business and in the interest of the State itself, urgently call comes to England. Banking, railway, and other for revision. Instead of encouraging the concentrabusiness is now carried on in every quarter of the tion of wealth in the State, the effect constantly globe by British capital and managed by British

operating to an extent none the less, great because officials. According to the recent report of the

the operation is silent and invisible, is to drive board of trade, there were in the United Kingilom capital out of the State. in April, 1894, 18,361 companies, with a paid-up

Very truly yours, capital of £1,035,029,835, whereas the capital of all

JOHN F. DILLON.

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enforcing them against the passions, the beliefs The Albany Law Journal.

and the interests of multitudes can be accom

plished only by a despot armed with unlimited ALBANY, AUGUST il, 1895.

power. The result is that our statute books

are bristling with penal enactments that have Current Topics.

little effect in repressing the practices against

which they are aimed. I society that has not the [All communications intended for the Editor should be ad

moral energy to enforce its will in any particultressed sinply to the Editor of The Al.BANY Law Journal.lar case should never embody that will in the all letters relating to advertisements, subscriptions, or other business inatters, should be addressed to THE ALBANY LAW

form of a statute. JOURNAL COMPANY.]

There are large numbers also in all free HE value of any periodical extends only so

societies whom lawamounts far as it remedies existing evils and adds to

passion. In easyLegislatures, the knowledge of the readers; and we have en

much engrossed with party and personal deavored for a long time 10 impress on the schemes, it is easy to induce acquiescence in public that not only is a great deal of vicious proposals for new laws upon subjects not fit for and bad legislation enacted yearly, but also legislation. I attribute these errors in legislathat the passage of many laws are procured in tion to the two causes already mentioned, ways which would never for a moment bear in which are closely allied with each other — first, vestigation. It is with pleasure that we pub- the common passion the cacoethes which lish part of the address of James C. (arter, afliicts so many; of framing new laws, and serEsq., President of the American Bar Associa-ond, the disposition or the willingness common tion on this subject. Mr. Carter said:

to all Legislatures of acting upon matters that ** Are the laws executed? Do they represent are not proper subjects of legislation at all. resolutions of a wise and self-controlled man i

“I know of nothing more needed among us which are actually carried out, or those abor-than a deepened conviction that the sphere of tive resolves that serve only to indicate al man legislation, like that of other forms of human conscious of error, but incapable of reforma- ! activity, has its proper limits, which can never tion? It is not likely that the selection of legs be exceeded without mischief, and a sufficient islators can ever be made with uniform wisdom;' knowledge of what these limits are." but a great advance will be made when those that aspire to be legislators begin to seek the knowledge the office requires.

While the newly-appointed commissioners “It seems incomprehensible that a people are considering the revision of the Code of should deliberately adopt a policy that fosters, Civil Procedure, it is highly desirable to call the increase of crime, contempt for the laws attention to the most recent decision in referand the debasement of character.

In some

ence to examinations of parties before trial. communities, notably in the city of New York, Practitioners are tolerably familiar with the juthe impossibility of a general and equal in- ; dicial gyrations on this subject, and we shall forcement of the laws and the revolting injus.: confine our attention to a single phase of the tice of in partial effort, have had the effect of law of discovery. We refer to the primary leading the executive officers to wholly aban- ' right to examine the conscience of a fiduciary don any serious attempt at a rigid enforcement. - the earliest occasion of the exercise of this And yet, these worse than useless results of power by a court of equity. Before the Code, legislative action seem nowhere to lead to any, we enjoved the advantage of a well-developed serious inquiry into the real nature of the system for extracting from trustees that fullest difficulty.

information in reference to the trust affairs, to “The condition of what are called sump- which the cestuis are fundamentally entitled. tuary laws is equally discreditable to Since the Code substituted a motion for the bill knowledge, both of the science of legislation of discovery, the broad difference between exand the teachinys of experience. The task of amining a mere adversary or contractual party

VOL. 52 — No. 9.

our

and one subject to a dominant right, like a ence to this most equitable right of parties intrustee, has been practically forgotten.

terested in the performance of trusts. The It is true that the General Term of the First complaint charges the taking by Sage of the Department clarified the situation in the case

trust assets as his own personal property. The of Career v. Good, 57 Hun, u6. The opinion trust deed to Sage and Gould was executed to of Mr. Justice Brady affirmed, in apt language, secure the holders of an issue of thirty millions the equity doctrine of discovery in all its of dollars of railroad bonds scattered in various plentitude. Referring to the relation of cestui parts of the world. The protection of such an and trustee — between the plaintiff and the de express trust is, therefore, peculiarly the profendant - the court said: “It is enough that vince of a court of equity, intensified by the such relation is shown to call into being the in- quasi-public nature of the security, and the quisitorial power of the court.." Recalling to large number of innocent holders of the obligathe profession the above and other opinions tions, depending for safety upon the honest-adValentine v. Harbeck, 12 Abb. N. C., and ministration of the trust. Such being the Dyett v. Seymour, 19 N. Y. St. 766), the fol-relation between the parties to this action, let lowing is a measured statement of the rule us see how the Supreme Court applied the therein affirmed. When a trustee of an ex- plain right of examination before trial. Any press trust is sued by his beneficiary, the latter rectilinear mind would suppose, from the au

as the real and equitable owner-has the ab- thorities above cited, that the establishment of solute right to compel the trustee to divulge the relation of trusteeship between the parties under oath, before trial, every fact in relation

to the action would be sufficient to entitle the to the trust within the trustee's knowledge. cestui plaintiff to search the conscience of the This right to a full discovery is as much the trustee defendant, in relation to the charges of cestuis property as the corpus of the estate it- misappropriation made by the complaint. Sage self. He has a right to prove his case from admits that he is trustee, but denies the alleged the trustee's mouth, and to put him on

malversation. The bondholders being bound equality with his trustee, he is entitled to the to prove the malversation propose to do so by exercise of this right before he embarks on a

Trustee Sage's own testimony. He knows trial--as he was so entitled by bill of discovery. what he has done with the trust property. If It is his own proprietary information which he has not coverted it, he will so swear, on his he seeks from the fiduciary, and he may use

examination, and the bondholders would have it to determine whether he will go to trial (or made him their own witness. If he has coveven to bring suit) or whether in default of verted the trust property, the bondholders are disclosure by the fiduciary he will call other entitled to his testimony to prove their case. witnesses. The decisions cited, incorporating In any event, the trustee is the one person, of the above statement of law, supposedly landed all the world, most competent to prove his own us again upon the solid ground of the English transactions. The cestui's property and its and American chanceries-in applying this administration being confided to the trustee, invaluable remedy for beneficiaries of trusts.

the cestui's is less able to tell what has been the But the general principle affirming this im- course of management by the trustee. These memorial right of cestuis to the possession of considerations illustrate the common sense of the knowledge acquired by their trustees dur- the rule, unqualifiedly entitling cestui's to dising their administration of their trust, has again covery-without which they would be practibeen shattered in its first formidable applica

cally helpless. tion. At Chambers, in the First Department,

Let us now turn to this latest deliverance in Trustee Russell Sage has succeeded in having the law of discovery. The learned justice says: this forensic weapon deflected from his fiduci

In the next place, the affidavit does not show ary corpus. In the suit of the Soldiers' | facts and circumstances to indicate that Mr. Orphans' Home of St. Louis, against Sage and Sage is a material and necessary witness for the the Goulds, the opinion at Special Term again plaintiff.” Shades of the chancellors! Trustees unsettles the whole sea of controversy, in refer- | not necessary and material witnesses in actions

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by their cestuis against them, in regard to their called upon to disclose his whole case before administration of their trusts. Why, the rela- he is called upon in the regular course of judition itself establishes the necessity and materi- cial proceedings to appear on the stand ality of their testimony — “calls into being the witness.” Is there law of disinquisitorial power of the court." Starting covery, and what was the object of its instituwith obliviousness of this fundamental princi- tion? Discovery from trustees is to make them ple, the learned justice falls into an unbroken disclose the cestui's case, not the trustee's case. sequence of errors in the law of discovery. He But from the tenor of this opinion, one would says: “Nor does it appear that the facts and suppose that the information which the trustee circumstances in respect of which Mr. Sage's has got by being entrusted with the cestui's testimony is sought, are within his knowledge business-belongs to the trustee, for his own alone.” What has this to do with the right of benefit. Moreover, the Justice objects to the discovery from the trustee ? The facts of a affidavit being made by an attorney in fact for trustee's malversation might (though not likely) a foreign corporation. An agent was a good be known to a hundred people, but their knowl- enough affiant to a bill of discovery, for a Court edge would not detract, in the slightest degree of Chancery (Rule 17). The Code requires from the cestui's equity, to prove his case only “an affidavit ” to obtain orders of examiby the best evidence - the complete cognation, and in the case of foreign corporations, nizance of the man who did the deeds. It specially authorizes the verification of comis enough to make Lord Hardwicke shudder in plaints, by agents. his grave, to learn that it is only when nobody Perhaps great stress should not be laid upon else knows about the administration of a trust

this Special Term opinion, if it stood alone, that discovery can be had from the trustee. inasmuch as the learned author was charged But this learned Court proceeds: “Nor does it in a recent opinion in a higher court, with want appear

that it is necessary that the of comprehension of one of its late decisions. testimony should be procured before the trial." But in the case of The Soldiers' Orphans' Home Mark ye! a cestui, whose affairs have been en of St. Louis, against Sage and Gould, the Gentrusted to another man, must take the risk of eral Term affirmed the order below, without preparation for trial under deprivation of the opinion, giving the plaintiff leave to renew on best source of information regarding his affairs, “proper affidavits. We have stated above while the trustee necessarily knows it all. Dis the grounds on which the Judge at Chambers covery in equity always precedes the trial on the found the affidavit insufficient. Are those the merits. Are trusts created for the benefit of grounds, satisfactory to the First Department trustees ?-to enable them to keep the trust Judges, for refusing this precious right to these property ? If not, certainly the law must bondholders? Or does that Court - soon to enable the cestuis to get on an equality of merge into the dignity of an Appellate Divipreparation for trial with their trustees. Other sion-deem it safer to follow Lord Thurlow's wise such trials would be purely on the aleatory advice to the Colonial Judges: “Decide your method for the cestuis: but on the "loaded cases, but don't write any opinions." dice" method for the trustees. But all of these The commissioners to revise the Code, have obstructions to the cestui's right to discovery now to consider this contemporary state of the flow from the original error as to the nature of law. Let them cast their eyes back towards the that right. The justice should have borne in

long vista that we have traversed in the law of mind that in examining his trustee the cestui

trusts to reach this slough of despond. At is getting at information which belongs to him, first, consider trusts as mere onerous honoraria, not to the trustee. So it happens that the subject to the duty of showing accounts. Then, climax of bad law is capped when this Chan- the rule of compensation for services became cellor tells the Bar of New York that “ There

the counter-balance, for the duties and risks of is nothing to show

that there is the fiduciary. Now, in 1895, in the county of any reason whatever or necessity for compelling New York, the trustee has not only commishim to submit to an examination and thus be I sions, but he need render no account of the

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