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court to determine whether certain admitted or clearly proven facts constituted probable cause. (Smith v. Liverpool & London & Globe Ins. Co., [Cal.], 40 Pac. Rep. 540.)

EVIDENCE.

MASTER AND SERVANT-NEGLIGENCE -A night watchman was found dead under an unrailed bridge connecting two buildings, which he customarily crossed in the performance of his duties. Held, in an action to recover damages for his death, evidence was admissible which tended to show what kind of a man he was in respect to health, vigor, activity and sobriety, and his bodily mental peculiarities. (Overman Wheel Co. v. Griffin [U. S. C. C. of Ap.], 67 Fed. Rep. 659.)

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 sale under a deed of trust given for the price thereof, as the trustee can be compelled to pay the tax out of the purchase money. (Patch v. Morrisett [Va.], 22 S. E. Rep. 173.)

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tract between a city and a water company provided that the latter should put in such further number of fire hydrants upon street mains as may be ordered by said city council, "provided that the cost and expense of all such further number of hydrants and of the putting in of the same shall be paid by said city." Held, that the city was liable only for the actual sum expended by the company in putting in such hydrants, and not for what such work was reasonably worth. (Bull v. City of Quincy [Ill.], 40 N. E. Rep. 1035.)

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and the bank pass by the grant, and the riparian owner cannot be divested by a subsequent survey of the islands. (Grand Rapids & I. R. Co. v. Butler [U. S. S. C.], 15 S. C. Rep. 991.)

TRUST DEED-POWER OF SALE. -A trust deed of land provided for a sale on default, "as in cases of foreclosing mortgages, by bill in chancery, by some suitable person, to be appointed in writing by any person interested in such trust fund." Held, that a conveyance to a purchaser at a sale conducted as a sale under judicial process, by a person appointed in writing by one interested in the debt, conveyed to him the legal title. (Lang v. Stansel [Ala.], 17 South. Rep. 516.)

Correspondence.

KARLSBAD, AUSTRIA, August 5, 1895.

Editor of the Albany Law Journal:

It is well known that in England Commercial and Business Companies, in fact, nearly all Corporations for Profit, are organized under what are known as the Companies Acts. The general principles on what the legislation embodied in those acts is founded, and the beneficial effect thereof to England are well set forth in the following article in the London Times of August 3d instant.

THE COMPANIES ACTS.

The report of the departmental committee appointed by the Board of Trade "to inquire what amendments are necesssary in the acts relating to joint-stock companies incorporated with limited liability," has been published. The report is of considerable length and an addendum follows it, in which Mr. Justice Vaughan Williams gives reasons for dissenting from some of the conclusions of his colleagues. The appendix to the report consists of two parts. Part I. contains evidence supplied by various persons and public bodies as to matters on which the committee desired information; sugges-· tions from various persons or bodies as to changes in the existing law; and also the judgments in a certain important case. Part II. consists of the draft bill prepared by the committee.

Experts in company law will, doubtless, have much to say on the draft bill recommended by the committee. Many suggestions that have been eagerly pressed by reformers, have been put aside as impracticable. In particular, the committee have not seen their way to approving of the establishment of the principle of compulsory reserve liability, which, however, is strongly supported by Mr. Justice Vaughan Williams. Neither do they

recommend a revival of the old practice of double registration, though they endeavor to secure some of the advantages of that system by enlarging the powers of the "statutory" meeting and providing that it shall be held earlier than at present. On the other hand they recommend that every prospectus shall mention a definits sum to be subscribed before the company shall proceed to allotment. They have also inserted clauses declaring the law as to the duties and liabilities of promoters and directors, and a clause requiring disclosure to be made in every prospectus inviting subscription to shares or debenturs of certain defined matters, among others, of the name of the real vendor and the amount of purchase-money payable to him. They repeal the well-known "section 38" of the act of 1867, providing for the disclosure of contracts, the effect of which is now almost invariably evaded by the insertion of a "waiver clause "" in prospectuses. The committee hope to get the results contemplated when clause 38 was devised by other means, including a general sub-section to clause 14, relating to information required to be stated in prospectuses. The committee recommend that the payment of commissions for underwriting capital and for some other purposes be legalized under certain conditions. Having given a brief outline of some of the leading features of the new draft bill devised by the committee, we conclude by quoting a paragraph in the report which lays down the general principles of the legislation which the committee have adopted. They say:

Before inquiring into the typical forms of fraud against which further protection is sought or the nature of the remedies to be applied, it is convenient to consider shortly the general lines upon which, and the limits within which, the Legislature can safely or usefully interpose. It is a trite observation that legislation cannot protect people from the consequences of their own imprudence, recklessness, or want of experience. The Legislature cannot supply people with prudence, judgment, or business habits. It must be remembered that the majority of companies are honestly formed for carrying on a legitimate, though it may be a speculative, enterprise or business, and the business is conducted with honesty and reasonable ability and judgment. In consequence partly of the facilities which exist for the formation of companies in this country, a vast amount of foreign enterprise and foreign business comes to England. Banking, railway, and other business is now carried on in every quarter of the globe by British capital and managed by British officials. According to the recent report of the board of trade, there were in the United Kingdom in April, 1894, 18,361 companies, with a paid-up capital of £1,035,029,835, whereas the capital of all

companies in France, anonymes and en commandite, was, in December, 1894, calculated approximately at £420,000,000. The capital of German companies was estimated by Mr. Gerb, of her Majesty's Consulate-General in Berlin, at £200,000,000, but Mr. Schuster puts it at £300,000,000. The capital embarked in English companies, therefore, exceeds that represented by French and German companies together by at least £315,000,000. The number of persons who are interested, either as shareholders or bond or debenture holders, in these companies is, of course, enormous. It is obvious that legislation affecting interests of this magnitude and widespread character demands great caution and care. Restrictive provisions, which may have the effect of either curtailing the facilities for the formation of companies which bring so much business to England, or of embarrassing the administration of companies, or deterring the best class of men from becoming directors, are not to be lightly entertained.

On the other hand, it must be generally acknowledged that a person who is invited to subscribe to a new undertaking has practically no opportunity of making any independent inquiry before coming to a decision. Indeed, the time usually allowed between the issue of the prospectus and the making of an application does not permit of any real investigation. The maxim of caveat emptor has, in the opinion of your committee, but a limited application in such cases.-London Times, August 3, 1895.

Carefully considered there is here a valuable lesson for the State and especially the city of New York, which is the commercial center of the United States as London is of Great Britain. Many of the restrictive provisions in the existing corporation laws of New York are unwise, and have, as I know and as everybody knows who is familiar with their effect, driven large amounts of capital out of the State. The laws ought to be so modified and liberalized as that New York capital might under New York organizations carry on business of all kinds, not only in other States, but in every part of

the world.

The direct inheritance tax imposed in New York, but not in the neighboring States, combined with unequal and therefore unjust taxation of the personal property of deceased persons, operating in connection with its short sighted corporation laws are inflicting upon the State incalculable injuries, and in the interest of the State itself, urgently call for revision. Instead of encouraging the concentration of wealth in the State, the effect constantly operating to an extent none the less, great because the operation is silent and invisible, is to drive capital out of the State.

Very truly yours,

JOHN F. DILLON.

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The Albany Law Journal.

ALBANY, AUGUST 31, 1895.

Current Topics.

[All communications intended for the Editor should be adIressed simply to the Editor of THE ALBANY LAW JOURNAL. All letters relating to advertisements, subscriptions, or other business matters, should be addressed to THE ALBANY LAW JOURNAL COMPANY.]

THE

HE value of any periodical extends only so far as it remedies existing evils and adds to the knowledge of the readers; and we have endeavored for a long time to impress on the public that not only is a great deal of vicious and bad legislation enacted yearly, but also that the passage of many laws are procured in ways which would never for a moment bear investigation. It is with pleasure that we publish part of the address of James C. Carter, Esq., President of the American Bar Association on this subject. Mr. Carter said:

"Are the laws executed? Do they represent resolutions of a wise and self-controlled man which are actually carried out, or those abortive resolves that serve only to indicate a man conscious of error, but incapable of reformation? It is not likely that the selection of legislators can ever be made with uniform wisdom; but a great advance will be made when those that aspire to be legislators begin to seek the knowledge the office requires.

"It seems incomprehensible that a people should deliberately adopt a policy that fosters the increase of crime, contempt for the laws and the debasement of character. In some communities, notably in the city of New York, the impossibility of a general and equal enforcement of the laws and the revolting injustice of a partial effort, have had the effect of leading the executive officers to wholly abandon any serious attempt at a rigid enforcement. And yet, these worse than useless results of legislative action seem nowhere to lead to any serious inquiry into the real nature of the difficulty.

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enforcing them against the passions, the beliefs and the interests of multitudes can be accomplished only by a despot armed with unlimited power. The result is that our statute books are bristling with penal enactments that have little effect in repressing the practices against which they are aimed. A society that has not the moral energy to enforce its will in any particular case should never embody that will in the form of a statute.

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There are large numbers also in all free societies with whom law-making amounts to a passion. In our easy-going Legislatures, too much engrossed with party and personal schemes, it is easy to induce acquiescence in proposals for new laws upon subjects not fit for legislation. I attribute these errors in legislation to the two causes already mentioned, which are closely allied with each other — first, the common passion the cacoethes - which afflicts so many, of framing new laws, and second, the disposition or the willingness common to all Legislatures of acting upon matters that are not proper subjects of legislation at all.

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"I know of nothing more needed among us than a deepened conviction that the sphere of legislation, like that of other forms of human activity, has its proper limits, which can never be exceeded without mischief, and a sufficient knowledge of what these limits are."

While the newly-appointed commissioners are considering the revision of the Code of Civil Procedure, it is highly desirable to call attention to the most recent decision in reference to examinations of parties before trial. Practitioners are tolerably familiar with the judicial gyrations on this subject, and we shall confine our attention to a single phase of the law of discovery. We refer to the primary right to examine the conscience of a fiduciary - the earliest occasion of the exercise of this power by a court of equity. Before the Code, we enjoyed the advantage of a well-developed system for extracting from trustees that fullest information in reference to the trust affairs, to which the cestuis are fundamentally entitled. Since the Code substituted a motion for the bill of discovery, the broad difference between examining a mere adversary or contractual party

and one subject to a dominant right, like a trustee, has been practically forgotten.

fendant

an

It is true that the General Term of the First Department clarified the situation in the case of Career v. Good, 57 Hun, 116. The opinion of Mr. Justice Brady affirmed, in apt language, the equity doctrine of discovery in all its plentitude. Referring to the relation of cestui and trustee between the plaintiff and the dethe court said: "It is enough that such relation is shown to call into being the inquisitorial power of the court.." Recalling to the profession the above and other opinions Valentine v. Harbeck, 12 Abb. N. C., and Dyett v. Seymour, 19 N. Y. St. 766), the following is a measured statement of the rule therein affirmed. When a trustee of an express trust is sued by his beneficiary, the latter as the real and equitable owner-has the absolute right to compel the trustee to divulge under oath, before trial, every fact in relation to the trust within the trustee's knowledge. This right to a full discovery is as much the cestuis property as the corpus of the estate itself. He has a right to prove his case from the trustee's mouth, and to put him on equality with his trustee, he is entitled to the exercise of this right before he embarks on a trial-as he was so entitled by bill of discovery. It is his own proprietary information which he seeks from the fiduciary, and he may use it to determine whether he will go to trial (or even to bring suit) or whether in default of disclosure by the fiduciary he will call other witnesses. The decisions cited, incorporating the above statement of law, supposedly landed us again upon the solid ground of the English and American chanceries-in. applying this invaluable remedy for beneficiaries of trusts. But the general principle affirming this immemorial right of cestuis to the possession of the knowledge acquired by their trustees during their administration of their trust, has again been shattered in its first formidable application. At Chambers, in the First Department, Trustee Russell Sage has succeeded in having this forensic weapon deflected from his fiduciary corpus. In the suit of the Soldiers' Orphans' Home of St. Louis, against Sage and the Goulds, the opinion at Special Term again unsettles the whole sea of controversy, in refer

ence to this most equitable right of parties interested in the performance of trusts. The complaint charges the taking by Sage of the trust assets as his own personal property. The trust deed to Sage and Gould was executed to secure the holders of an issue of thirty millions. of dollars of railroad bonds scattered in various parts of the world. The protection of such an express trust is, therefore, peculiarly the province of a court of equity, intensified by the quasi-public nature of the security, and the large number of innocent holders of the obligations, depending for safety upon the honest administration of the trust. Such being the relation between the parties to this action, let us see how the Supreme Court applied the plain right of examination before trial. Any rectilinear mind would suppose, from the authorities above cited, that the establishment of the relation of trusteeship between the parties

to the action would be sufficient to entitle the

cestui plaintiff to search the conscience of the trustee defendant, in relation to the charges of misappropriation made by the complaint. Sage admits that he is trustee, but denies the alleged malversation. The bondholders being bound to prove the malversation propose to do so by Trustee Sage's own testimony. He knows what he has done with the trust property. If he has not coverted it, he will so swear, on his examination, and the bondholders would have made him their own witness. If he has covverted the trust property, the bondholders are entitled to his testimony to prove their case. In any event, the trustee is the one person, of all the world, most competent to prove his own transactions. The cestui's property and its administration being confided to the trustee,

the cestui's is less able to tell what has been the

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appear

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called upon to disclose his whole case before he is called upon in the regular course of judicial proceedings to appear on

as

a witness." Is there a law of discovery, and what was the object of its institution? Discovery from trustees is to make them

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by their cestuis against them, in regard to their
administration of their trusts. Why, the rela-
tion itself establishes the necessity and materi-
ality of their testimony-"calls into being the
inquisitorial power of the court." Starting
with obliviousness of this fundamental princi-
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 exami-
by the best evidence the complete cog- nation, and in the case of foreign corporations,
nizance of the man who did the deeds. It specially authorizes the verification of com-
is 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
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 Gen-
trusted 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
preparation for trial with their trustees. Other-
wise such trials would be purely on the aleatory
method for the cestuis; but on the "loaded
dice" method for the trustees. But all of these
obstructions to the cestui's right to discovery
flow from the original error as to the nature of
that right. The justice should have borne in
mind that in examining his trustee the cestui
is getting at information which belongs to him,
not to the trustee. So it happens that the
climax of bad law is capped when this Chan-
cellor tells the Bar of New York that "There
is nothing to show
that there is
any reason whatever or necessity for compelling
him to submit to an examination and thus be

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merge into the dignity of an Appellate Division-deem it safer to follow Lord Thurlow's advice to the Colonial Judges: "Decide your cases, but don't write any opinions."

The commissioners to revise the Code, have now to consider this contemporary state of the law. Let them cast their eyes back towards the long vista that we have traversed in the law of trusts to reach this slough of despond. At first, consider trusts as mere onerous honoraria, subject to the duty of showing accounts. Then, the rule of compensation for services became the counter-balance, for the duties and risks of the fiduciary. Now, in 1895, in the county of New York, the trustee has not only commissions, but he need render no account of the

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