ruptcy Act provides that "A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as, etc," specifying certain debts not discharged and not including fines. Hence if the fine be provable then under section 17 it would be a dischargable debt. Section 63 provides what debts may be proved and allowed against the bankrupt's estate, and among other classes of debts expressly provided for is "a fixed liability, as evidenced by a judgment or an instrument in writing, absolutely owning at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such

as

were not then payable and did not bear interest." Construing these sections literally the unavoidable conclusion seems to be that such a claim is provable. The West Virginia court so holds, saying that section 63, as quoted, “expressly declares that where a liability is evidenced by a judgment it is a provable debt. There is no qualification of the language employed in the statute which would tend to show that congress intended to make a distinction in regard to judgments obtained against the bankrupt, either in favor of the United States or of a state. The construction that I give to this statute does not confine the proof of debts to the citizens of the country but permits judgments obtained in either the courts of the United States or of a state against the petitioning creditor to be proved." Then citing section 17 the court continues: "This provision is the only one referring to any demand or claims that a state may urge against a bankrupt and it is specific in its language. The section provides the only limitation that would prevent a bankrupt from obtaining a full discharge from all his debts."

On the other hand the Kentucky court places a more liberal construction upon the sections cited and deduces from the West Virginia court's construction results which appear to the Kentucky court an absurdity, viz..that such an operation of the bankrupty act would be an unconstitutional interference by the federal government with the execution of state penal statutes. The court says: "In my opinion it was never intended in this indirect way (in derogation of the exclusive right of the chief executive to pardon offenders or to remit fines imposed upon them) to relieve criminals from penalties incurred for criminal acts. It seems to me that to rule otherwise would make the bankrupt court the means of frustrating proper efforts to enforce criminal statutes enacted for the public welfare. Congress in my opinion never so contemplated or intended. * The provisions of the bankrupt act have reference alone to civil liabilities as demands between debtor and creditor as such, and not to punishments inflicted pro bono publico for crimes committed. Any other construction would seem to be absurd, and might trench, as already indicated, upon the exclusive constitutional right of

the chief magistrate, state or national, to remit fines and grant pardons. If these principles are sound, their operation will control in regard to the judgments of federal courts as well as to the judgments of state courts in criminal cases."

Aside from the question raised by the Kentucky court of federal interference with state rights, the operation allowed the bankrupt act by the West Virginia court would be an unprecedented assumption by the legislative and judical departments of the government of an exclusively executive prerogative. To avoid such results, without so far as the decision shows considering the evils that might result from such a construction, the court held, adversely to the West Virginia court, that such fines are not provable debts. So that the status of a fine is still undefined.

Under the decision of the Kentucky court there are three courses left to the state to pursue to satisfy its judgment:

First. If the court be correct in its statement that the provisions of the bankrupt act have reference alone to civil liabilities as demands between debtor and creditor as such and in its holding that a fine is not such a liability, then it is possible that the state could satisfy its claim by an execution upon the assets of the bankrupt in the hands of the trustee in bankruptcy, since if the bankruptcy court has no jurisdiction over the claim of the state it would be powerless to prevent the state making its debt out of any avail. able funds of the bankrupt. This in effect would be making the state's claim a prior one over the general creditors.

Second. The state could wait until the assignment of his exemptions to the bankrupt and then satisfy its debt out of the exemptions. But this would defeat one of the primary purposes for which the bankrupt act was enacted, to-wit, to offer to persons hampered by debts an opportunity to begin over again with an allowance out of their property sufficient to provide temporarily for themselves and their families.

Third. The state can seize the bankrupt's person and imprison him.

The Kentucky court seems to have been guided to its decision by questions of constitutional construction and an observation of the legal consequences attendant upon the decision of the West Virginia court. The West Virginia court seems rather to have placed upon the two sections what, in the language of the civilians, he evidently considered the authentic interpretation. Neither court seems to have deducted from its conclusions the practical effects upon the bankrupt himself in his relation, so to speak, as the ward of the bankrupt court.

TRUSTS-THEIR USES AND ABUSES.

1. The Meaning of a Trust.-A trust is a dominant combination of money, property, business or commercial power or energy. The form of the union is unimportant. It may be an association, incorporated or otherwise, it may be a single individual or a partnership. The essential element of the combination is the purpose to dominate, and this domination is the tendency which has created the most apprehension. If the charter of every prominent combination of capital or don inant company expressed the real intent of the organization, instead of reading "To manufacture, transport and market," the particular product in question, it would state as the purpose of the company, "To dominate in the manufacturing, to dominate in the transportation," and, what is quite as important, "To dominate in the market" of the product. The same tendency and intent to dominate is signified by the names of the organizations, "United States,' "Colonial," "Federal," and finally "National,” and even "International." All of this, both of structure and of name, indicates a purpose on the part of the organization to dominate in the markets of the world. It is not the combination in itself that is vicious, but it is the methods employed by some corporations in the attempt to dominate which creates the tendencies which are dangerous.

2. The Origin and Development of the Trust Idea.-Recognizing that the combination and the consolidation of capital is a force, we spend no time in asking why it is here, further than to say that it is a part of the best growth and sound expansion of the American nation. It is essentially a part of the successful, aggressive American policy of commercial supremacy. As this country expands it requires its financial and commercial foundation to be strengthened in or der to compete with other nations. This the industrial movement of to-day is effectuating and successfully accomplishing. The tendency towards centralization is seen in financial life. The great banks are becoming greater and are establishing branches in all directions through a stock control of smaller banks or otherwise. One might be charged with lack of conservatism should

he suggest the possibility of the establishment of a great bank, perhaps under governmental influence, which shall act as a governor and regulator of the great financial machinery of this country. Is the anticipating payment of bonds or otherwise by the treasurer of the United States more than a mere temporary expedient on the part of the government to steady the finances of this country to prevent panics? Carrying this proposition to its logical extent, and having in mind the history of the great Bank of England, some assert that when this country becomes the great finance and credit power of the world, the trend of affairs will be toward the establishment of one great controlling financial institution under the United States law.

3. The Most Dangerous Tendency of Trusts. -The tendency of the great corporations is to become in a measure callous to public opinion, an error it may be on the part of the corporation, but unfortunate so far as the public at large are concerned. This indifference to public opinion and legislation is to a certain extent due to the fact that from the corporate standpoint many of the criticisms passed upon corporations, and much of the anticorporation legislation, is based upon a lack of understanding of the situation.

Many of the shafts which have been aimed at industrial combinations and at the movement as a movement emanating from the individual, from the politician and from the legislator have been the product of the mind of that class of people who have a pet theory peculiar to themselves for the cure of all ills incident to mankind by the adoption of a theory or the passage of a law. Many of the attacks upon combinations have been aimed at the supression of the movement rather than to the elucidation of the subject and the utilization of the force. Such attacks, legislative or otherwise, while dangerous to the combinations, react strongly against the public. This element of danger from the combination is itself in turn productive of a danger from the combination to the public itself. Ill-advised popular clamor, resulting likewise in unwise and ill-advised legislation, always tends to force combinations of capital, which should otherwise devote their attention to commercial matters, into the great field of legislative competition,

and ultimately, and as a logical result, into politics. Any attempt on the part of these industrial organizations to enter, voluntarily or otherwise, into the field of legislation and politics, is a tendency which is to be regarded with grave apprehension.

4. Trust Stocks as Gambling Devices.That combination which is governed, which is controlled through its management for the purpose of advancing or depressing the price of its securities on the market, is run on a principle other than that of a commercial enterprise, and must ultimately land where it belongs, in the gutter. At this point, too, the director ceases to direct the affairs for the benefit of the stockholder, the trustee ceases to be a trustee for the stockholder

whom he represents. The officer may be tempted to refuse information to the stock holder in order that he may use it for his own benefit. The temptation is to declare dividends or withhold them for the purpose of raising or depressing the market price of the securities, rather than to equitably distribute what belongs to the stockholder. The tendency of the great and sound corporations is to recognize this fact and to attempt by all legitimate means to avoid having the securities of their own corporation the football of speculation, either public or private. This is one of the evils which is curing itself, but nevertheless is a tendency to which it is proper to call attention. The example of the United States Steel Corporation in issuing to each of its stockholders, with each dividend, a siatement of its net earnings from operations is an announcement to the world that this great leader of combinations does not propose to be justly characterized as a blind pool; that it does not propose that its stock shall be justly excluded from the list of industrial investments as distinguished from speculative specialties. This is an example sure to be followed by many other industrials which cannot afford to take a lower position in this respect.

5. Publicity the Most Effectual Remedy. Publicity with regard to corporations is of two kinds, public publicity and private publicity.

Public publicity is not yet practiced to any extent by industrial combinations, and legislation has not yet been able to procure

Private publicity, or information to the

stockholders, is not always carried out to its fullest extent. Knowledge of immediate facts is sometimes conveyed only to an inside circle, a circle less in circumference in many cases than the board of directors, and by no means including all the officers of the corporation. Publicity must be secured by legislation, either national or state, and the latter, to be effectual, must be practically uniform among the states. The time is coming when public publicity will be an essential element of the success of every industrial combination which seeks its support from the public. As between combinations themselves, the sound corporation will avail itself of the opportunity to demonstrate its soundness by public statements, and in such demonstration force to a lower position its competitor, who is unwilling and inferentially unable to make the same public showing. Public confidence is and must be the essential element of the success of any industrial. Public confidence cannot be based upon anything but knowledge of the facts, and this knowledge of the facts must come from the corporation by way of statements to the public, for the accuracy of which statements some one is responsible. The better corporations are voluntarily practicing publicity, they would favor a statute which secured public publicity from all corpora

tions.

This would redound not only to the benefit of the public, to the steadying of industrial finances, to the making of industrial securities a permanent investment for holders, large and small, but would also prevent the formation of blind pools, industrial swindles, and tend to avert financial panics. Publicity is to industrials what street lighting is to municipalities. It promotes legitimate business and prevents crime.

6. Divergent State Legislation in Favor of and Against Trusts.-A danger both subjective and objective. A menace both to the combination and to the people is found in the competitive strife among states for revenue from corporations. Just so long as it is possible for a corporate organization in one state to do business in many other states which is forbidden to its own corporations, just so long will we find different states offering inducements to capital to incorporate under their peculiar laws. To-day we find states giving express permission to

their own corporations to do in other states what such corporations are expressly prohibited from doing at home. For years the state of New Jersey stood pre-eminent among the charter-granting states, until from the revenue derived from corporations she practically abolished the necessity for state taxes, contributed large sums to schools, for good roads, and for matters of public use and utility. At the beginning of this month the state of New Jersey had in its treasury something over $2,000,000 as a surplus. In 1900 the state of New York although it had for years waged war upon New Jersey's system of incorporations, gave way to the contrast between the state of its treasury and that of New Jersey. New York out-Jerseyed New Jersey in so-called liberality to corporations. It amended its corporation act upon the theory that the greatest paper liberality would produce the greatest revenue. The staid old state of Connecticut followed suit and opened its doors, offering its inducements to corporations. The states of Maine and North Carolina followed the example of New York and Connecticut. The states of Delaware and West Virginia had already adopted every provision which could be suggested to make the state a successful charter-granting state and to increase their revenue, and finally South Dakota comes forward with a proposition that it will grant to a corporation everything that it will ask, and for a consideration so minute as to be scarcely worth mentioning. On the other hand, influenced by the cry against monopolies, making no distinction between the combination of to-day and the monopolistic trust of yesterday, other states have filled their statute books with discriminations against business combinations until it is almost impracticable to do business within the state. State legislation is each year growing more divergent, and we can look in that direction with no assurance to any uniformity of procedure and regulation of corporations.

7. Federal Intervention and Control.The question is national in extent and breadth. It can only be dealt with by legislation equally as broad, that is, national legislation. The objection to national legislation is suggested that it would be unconstitutional. The Supreme Court of the

United States found its way out of the same difficulty when suggested in the case of the national banking act. It might be said in the present case that the public welfare more urgently required a national corporation act than the same public welfare required a national banking act. To say nothing of the commercial interests of the country, the financial interests are to-day interested to a larger extent in industrial securities than in banking when the national banking act was passed

I do not wish to be misunderstood as to the character of the industrial movement of to-day. It is of the highest order, and is progressing in the right direction. It has been, and is to day, productive of great good to this country. It is a direct contributing factor to the commercial advancement of the United States. Theorists, social reformers and students of economics have argued against the character of the industrial life of to-day. They overlook the fact that, while there are dangerous tendencies, as have been frankly admitted, there are ills which are natural to mankind in any position, not to be cured by hasty legislation, not to be overcome by vituperation and abuse, but rather to be minimized, and perhaps ultimately eliminated by wise, conservative examination and decision upon the question of a whole derived from the experience of the people.-James B. Dill, in an Address before the Merchants' Club of Chicago.

STATUTE OF FRAUDS-PROMISE TO ANSWER FOR DEBT OF ANOTHER AS SURETY.

HARTLEY v. SANFORD.

Court of Errors and Appeals of New Jersey, November 15, 1901.

The defendamt's son was indebted to M, who desired additional security. The defendant thereupon applied to the plaintiff to become surety for the son, and promised to reimburse him if he was compelled to pay the debt. Accordingly the plaintiff came besurety, and afterwards was obliged to pay the debt. Held, in an action on the promise, that it was within the statute of frauds, as a "special promise to answer for the debt, default or miscarriage of another."

DIXON, J. The material facts of this case, as disclosed by the record, are that the defendant's son was indebted to M, who desired additional security; that thereupon the defendant applied to the plaintiff to become surety for the son,

and promised him that, if he was compelled to pay the debt, he (the defendant) would reimburse him; that accordingly the plaintiff became surety for the son, and subsequently was obliged to pay the debt. This suit was brought upon the promise, which was oral only. It appears that at the trial in the Passaic circuit the jury were instructed to find for the plaintiff if they were satisfied the promise had been made, but the question as to the legal sufficiency of the promise was reserved and certified to the supreme court, which afterwards advised the circuit that the promise was valid, and thereupon judgment was entered on the verdict.

In this court error has been assigned on the charge at the circuit, as well as on the advisory opinion of the supreme court; but, there being no bill of exceptions presenting the charge, the assignment of error respecting it is futile, and must be disregarded. The assignment upon the opinion of the supreme court is legal, and presents the only question now before us, which is whether the plaintiff's suit can be maintained, in view of our statute, "that no action shall be brought to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person, unless the agreement upon which such action shall be brought, or some memorandum or note thereof shall be in writing and signed by the person to be charged therewith or some other person thereunto by him or her lawfully authorized." The advice of the supreme court was based upon its opinion that under the adjudications in this state the promise of one person to indemnify another for becoming surety of a third is not within the statute. The cases cited in that opinion to support this view are Apgar's Admrs. v. Hiler, 24 N. J. Law, 812; Cortelyou v. Hoagland, 40 N. J. Eq. 1; and Warren v. Abbett (N.J. Sup.), 46 Atl. Rep. 575. Of these, the only one of controlling authority here is that of Apgar's Admrs. v. Hiler, which is a decision of this court. That decision does sustain the broad proposition for which it was cited. This court there held merely that, between two persons who had signed the same promissory note as sureties for another signer, the oral promise of one surety to indemnify the other was valid. This promise was deemed outside of the statute, because by signing the note the promisor had himself become a debtor, and so his promise to indemnify was to answer for his own debt. In Cortelyou v. Hoagland several stockholders and directors of a corporation had promised to indemnify another stockholder and director for indorsing a corporate note, and Warren v. Abbett was of similar character. In the Cortelyou case the chancellor rested his decision on Apgar's Admrs. v. Hiler, which, as above stated, was essentially different and on Thompson v. Coleman, 4 N. J. Law, 216, which was a promise to indemnify a constable for selling under execution goods claimed by an outside party,-a case where the promisee had

no redress except on the promise, and therefore clearly outside of the statute. If the decision in Cortelyou v. Hoagland and Warren v. Abbett are to be supported on prior New Jersey adjudications, such support must be found in the doctrine that where the consideration of a promise to answer for the debt, default, or miscarriage of another is a substantial benefit moving to the promisor, then the statute does not apply. This rule was recognized in Kutzmeyer v. Ennis, 27 N. J. Law, 371, and Cowenhoven v. Howell, 36 N. J. Law, 323. To support those decisions on this rule, it must be held that the payment of a corporate debt is substantially beneficial to the stockholders or directors of the corporation,-a proposition which seems to be denied in other tribunals. Browne, St. Frauds, § 164. In the promise now under consideration there was no such element, and no case has been found in our reports involving the present question. We should therefore decide the matter on principle, or as nearly so as related adjudication will permit. Looked at as res nova, it seems indisputable that the defendant's promise was within the statute. It was to respond to the plaintiff in case the defendant's son should make default in the obligation which he would come under to the plaintiff as soon as the plaintiff became surety for him, an obligation either to pay the debt for which the plaintiff was to be surety, or to reimburse the plaintiff if he paid it. In this statement of the nature of the promise there is, I think, every element which seems necessary to bring a case within the purview of the statute. The parties, in giving and accepting the promise, contemplated (1) an obligation by a third person to the promisee; (2) that this obligation should be the foundation of the promise. i. e., that the obligation of the son to the promisee should attach simultaneously with the suretyship of the plaintiff, and thereupon should arise the obligation of the promisor for the fulfillment of the son's obligation; and (3) that the obligation of the promisor should be collateral to that of the son, i. e., if the latter should perform his obligation, the promisor would be discharged, while, if the promisor was required to perform his obligation, that of the son would not be discharged, but only shifted from the promisee to the promisor. An examination of the cases will show that not many of them are in conflict with this view, when they are free from differentiating circumstances. In the leading case of Thomas v. Cook, S Barn. & C. 728, such a circumstance appears in the fact that the promisor was himself a signer of the bond against which he promised to indemnify the promisee, and thus the promise was, in a reasonable sense, to answer for that which, as to the promisee, was the promisor's own debt. On this difference may be explained the decisions in Jones v. Letcher, 13 B. Mon. 363; Horn v. Bray, 51 Ind. 555, 19 Am. Rep. 742; Barry v. Ransom, 12 N. Y. 462; Sanders v. Gillespie, 59 N. Y. 250;