The Merchants' Magazine and Commercial Review

GUARANTORS.

In the Superior Court, General Term, July, 1854. Before Judge MITCHELL, Chief Justice, Judges ROOSEVELT and CLERKE, Associates. Henry Green, &c., vs. William T. Cutter.

By the Court-Roosevelt, J.-The defendants were guarantors. They loaned their names as inducements, in behalf of their friends, to invite credits which would otherwise have been withheld. Under the plea of alleged want of due diligence in prosecuting the primary debtors, they now seek to escape from the consequences of their engagement. At the time the goods whose payment they guarantied were sold, the purchasers resided and did business in Michigan. When the purchasers failed to pay, the creditors who had trusted them brought an action in the United States Circuit Court in Michigan; but the Sheriff or Marshal to whom the process was intrusted, returned one of the defendants as not found. Although, therefore, the suit was against both, the judgment was against one. And this judgment, it is said, merged the joint demand and converted into a claim against one only, thus, to the prejudice of the sureties, discharging the other debtor; whereas, had the creditors brought their suit, as they might have done, in the State Court, the judgment, in virtue of a special State law would have been, it is said, against both, and both would have been held to their joint obligation. The argument, it will be perceived, assumes that, by the proceeding in the United States Court, one of the debtors was discharged, and that that proceeding was the voluntary and improvident act of the creditors. And as it is true, in point of law, that a judgment against one of his two joint debtors, in all cases and under all circumstances, discharges the other, and that the other, if afterwards used upon the joint demand, may plead the previous unsatisfied judgment against his associate, as an absolute bar? Is it no reply to such a plea to say that the creditor did not elect, but was compelled to take judgment, as he did, against the one alone, because the other had absconded? The doctrine of merger is founded upon convenience-convenience to the Court and convenience to the parties-upon the consideration that two suits should not be permitted where one was sufficient. Does this reason apply in favor of a man who had rendered a joint, and of consequence a single, suit impossible? What right has he, or rather what right could he have, to complain of double vexation? Is it possible in such a case for the creditor to obtain a full remedy except by two suits? Even with the aid of a special statute, the Court, having no jurisdiction over an absent party, can render no binding personal judgment against him; so that, although in four against two, the recovery in effect, if pursued in that mode, would be only against one. Wherein as a remedial proceeding, then, would such a judgment, in the State Court, have been more advantageous than the judgment which was recovered in the Federal Court? In either case the record would have shown that the course of action was a joint demand, and that if an effectual recovery was not had against both, it was no fault of the plaintiffs. They sued both, but both were not found. Besides, a federal judg ment in some respects may be preferable to a State judgment. Stay laws and appraisement laws are powerless for it; and the Supreme Court of the United States had decided a decision, which in subsequent cases brought within their jurisdiction, they were likely to follow, that a separate judgment against one partner, even where taken without necessity, was no bar to a subsequent suit against the other. It may be that that adjudication has since been partially qualified; yet the reasoning on which it rests, in all cases of necessity, still remains. At all events there cannot be a doubt, I think, that a court of equity in such a case, would enjoin the defendant from availing himself of such a technical bar-in analogy to the practice which allows a bill in equity against the representatives of a deceased partner, after an unsatisfied judgment against the survivor, notwithstanding that it involves the difficulty of merger and double litigation. Double litigation is an evil; but like other evils, if necessary to the attainment of justice, it must be submitted to, especially by those whose acts or omissions have created the necessity. I assume, therefore, that whether the judgment in Michigan were in form against two but in fact against one, or both

in form, and in fact against only one, it would in neither case deprive the parties of an efficient remedy subsequently, in some form, against the other. At all events, the suit, brought in the Federal Court, being a bona fide exercise of a sound discretion, and especially as no actual loss from that election is either proved or pretended, there is no ground for charging the creditors with a want of "due and legal diligence." The effort made by them to recover of the principal debtors was a legal effort, and a proper effort and the only one, as it ap pears to me, which they were bound to make. Its fruitlessness is no answer to the argument. The very fruitlessness, anticipated as possible by all the parties, was the reason for tendering the guaranty and the motive for requiring it.

It seems to be assumed-and some judicial dicta have at times given countenance to the idea--that in actions against guarantors all sorts of technicalities, whether equitable or inequitable, rational or irrational, are to be invoked by counsel or encouraged by the Court, to prevent a recovery. For myself I do not believe that the common law, which in its general scope professes to be founded on common sense and common honesty, is so inconsistent as to lose sight of these attributes the moment it approaches the boundaries of suretyship. What difference is there in principle between soliciting credit for one's self or soliciting it for one's brother? The consideration is the creditor's parting with his goods on the faith of the engagement, and the benefit the surety receives, or expects to receive, from obliging his friend. It is not only a good, but a valua ble consideration--as much so, in every just sense, as if the surety had himself become the purchaser. Judgment for plaintiff.

LAND CASE DECIDED BY THE SUPREME COURT OF TEXAS.

The Supreme Court of the State of Texas, sitting at Galveston, has just rendered a decision of great importance to settlers and purchasers of land in Texas, settling a principle which applies to hundreds of land titles. The question at issue was, what under the colonization laws of Texas constituted a residence which entitled a man to enter land, as head of a family, and transmit it to his heirs, he never having carried his family to reside there.

The case before the Court was that of one Russell, from the State of Maine, who went to Texas in the year 1834, and in August, 1835, obtained a grant of land in the then county of Montgomery, representing himself as having come to the country with his family to reside. Shortly after, he went back to Maine, for the alleged purpose of bringing out his family, but died soon after. In 1841, his daughter's husband took possession of the land, and made a crop. In 1849, one Randolph located a land warrant upon it as vacant land, alleging it to be public domain, by reason of the invalidity or forfeiture of the grant to Russell, first as a non-resident, and then for fraudulent description of himself.

The Court sustained the grant on both grounds. It decided that Russell's residence, with the intent to make his home in Texas, departing only with the purpose of bringing back his family, entitled him to enter the land, and that, constructively and legally, the domicil of his family was with him, and his declaration that his family was with him was legally correct according to the laws of Texas. The departure, with a bona fide intent to return, did not affect the domicil he had acquired, and the grant of land inured to his heirs.-Charleston Courier.

JOINT-STOCK COMPANIES.

The registered officer of a joint-stock banking company applied to prove against the estate of a deceased shareholder for calls due. By the deed of settlement, an option was given to the representatives of deceased shareholders either to sell the shares or become members of the company on certain conditions. Prior to the exercise of this option, the directors were empowered to retain the dividends, and, after notice, to declare the shares forfeited. No option had been exercised by the executors in this case, and the directors had retained the dividends, but had taken no steps to declare the shares forfeited. They were not held to be entitled to prove for calls due.-Eng. Law Times, Rep. 256.

COMMERCIAL CHRONICLE AND REVIEW.

GENERAL ASPECT OF COMMERCIAL AFFAIRS THROUGHOUT THE COUNTRY-STATE OF THE FALL TRADE -NECESSITY OF REFORM IN THE SYSTEM OF RAILROAD MANAGEMENT-COMPARATIVE STATEMENT OF THE BANKS IN THE CITY AND STATE OF NEW YORK, IN THE CITY OF BOSTON AND STATE OF MASSACHUSETTS, AND IN THF CITY OF NEW ORLEANS-REVENUE AND ESTIMATED IMPORTS OF THE WHOLE UNITED STATES-RECEIPTS FOR DUTIES ON IMPORTS AT PHILADELPHIA AND NEW ORLEANS-DEPOSITS AND COINAGE AT THE PHILADELPHIA AND NEW ORLEANS MINTS FOR JULY-IMPORTS AT NEW YORK FOR JULY AND FROM JANUARY FIRST-IMPORTS OF FOREIGN DRY GOODS -RECEIPTS FOR CASH DUTIES-EXPORTS FROM NEW YORK FOR JULY AND FROM JANUARY FIRST -EXPORTS OF LEADING ARTICLES OF DOMESTIC PRODUCE-INCOMING CROPS OF THE UNITED STATES, ETC.

THE market is but little more settled than at the date of our last, and in some of its features the aspect of commercial affairs is certainly less favorable. There have been more failures among business men throughout the country, although but few who were not involved in stock speculations have been obliged to yield to the storm. There is a general retrenchment and taking-in of sail among all classes, and thus it is to be hoped that there will be no important commercial disasters. Money continues in request, and most borrowers outside of the banks are compelled to pay from one to two per cent a month for the use of capital, while lenders in all quarters are more scrupulous, and the discrimination between first and second class securities is daily becoming more exacting.

The trade of the country presents some singular characteristics. While money is dear, provisions of nearly all kinds are dearer, and the stringeney in funds seems to produce little effect upon the prices of the necessaries of life. The trade in other merchandise in regular channels is quite slack. The country merchants have not yet made their purchases to any considerable extent, and are found less ready with the means of payment than at any previous time during the last three years. In the large cities the dry goods trade is far from prosperous, and both foreign and domestic fabrics have been offered at farther concessions in price. This is most noticeable in foreign fabrics, with which the markets are overstocked, and the auction houses are crowded with goods, most of them of recent importation, which are forced off at a large decline from rates previously current. In localities where rents have advanced the most rapidly, there are evidences of reaction, and speculators in real estate are manifesting less boldness. These are regarded by shrewd observers, less as signs of general derangement than as evidences of returning health. The stringency in money matters will check the extravagance in living, and the tendency to overtrading and speculation. The sacrifice of goods will show the importers that there is a limit to their business, and that their receipts must bear some proportion to the wants of the country if they would reckon upon a profit. In short, the present is a day of rebuke, and there is some evidence that the country is disposed to profit by the lesson.

It is quite certain that even our shrewdest financiers have something yet to learn in the management of railroad affairs. We hinted at this in our last, and have heretofore exposed the popular fallacy that requires one man to do half a dozen things at a time, upon the plea that if he wants anything done he must do it himself. Nearly all the heavy railroad companies of the country are managed

nominally by those who have both head and hands full of something else, and not unfrequently by those, who in addition to such an incumbrance, are also too far from the scene of action. The convention of railroad operators at New York have decided on increasing the tariff of charges, and decreasing the speed and quantity of service on the leading railroads represented. This may save the companies from running behind, but it will not answer in the place of better management, which is now everywhere needed. Would any committee of merchants at New York undertake to be responsible for a mercantile business requiring millions of capital, and carried on at twenty different places beyond the reach of their personal observation? Would they do it as a slight addition to their other cares, to be turned off with a brief occasional notice? Does it make it any easier if the capital is invested in railroad property, and the managers are called a Board of Directors? There is a total want of economy and skill in the management of a large portion of the corporate companies in this country, which is now being felt in a wide-spread depreciation of property thus controlled. In this assertion

we design no reflection upon the officers or directors of such companies. Most of them accepted office after urgent solicitation, and a large portion of them give all the time they have to spare from their previous occupations, and quite as much as was expected of them when they were elected. The fault lies, not in the men, but in the system itself, which must be thoroughly remodelled before a high degree of success can be attained, and the difficulties now in the way be fully met and overcome. We would not recommend a niggardly "penny-wise and pound-foolish" policy, but a less wasteful use of the gross receipts must be attained, before the net profits will be such as to justify the continued use of capital for investments of this class. The power is everywhere applied at a disadvantage; the leeches fastened upon a large majority of these works, have hold of the long end of the lever, and apply the force chiefly to their own advantage. In regard to western railroad companies, there is another evil which has grown out of such management. Many roads which were doing a successful business by themselves, have left their proper work and sphere to take stocks in other roads, or in steamboat lines, or in something else which promised an advantage in return for such interference, but not sufficient to justify the course pursued In a few of these cases the step has been taken honestly by a board of directors, only anxious to advance the corporate interests they have in charge. In other instances the extraordinary policy has been adopted for the private benefit of those who while managing one company, have an equal or greater interest in the improvement requiring the assistance thus improperly afforded. We make these remarks because we deem the matter of much importance at this time, but we wish to guard against any improper inference which may be drawn from them. We do not believe that the evils complained of are so radical that they cannot be cured without a general catastrophe; nor do we believe, as many panic makers assert, that none of the railroads in the country are on a foundation sufficiently stable to support themselves. At the same time we do believe that a thorough reform is essential to permanent success, and that such a reform cannot be too speedily commenced.

The Banks throughout the country have lost more or less by the recent failures, but they are all discounting cautiously, and as far as possible curtailing their operations. The following will show the condition of the New York city banks

at the date of the last weekly returns. As a year has elapsed since the weekly averages were commenced, we give a recapitulation of each statement from the beginning, which will be found very valuable for future reference.

Week ending August 6, 1853