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the whole of the New Continent has furnished during the same period to the Old.
The allegations, then, growing out of the disappointments in fruitless undertakings, as to the exhaustion of the mineral wealth of Mexico, is in contradiction with the geognostic facts of the country, and even with the most recent experience. The Zacatecas mint alone, during the troubled period froin 1811 to 1838, has struck more than 66.332.000 piastres from 7.758.000 marcs of silver; and in eleven latter years (from 1822 to 1833) has yielded uninterruptedly from 4 to 5 million piastres; viz: 1829:
1930: 1831: 1832: 1833:
LEGAL MISCELLANY. - BANK BONDS.
From Hunt's Merchants' Magazine.
Liabilities of surelies on the bonds of officers in Banking and other public institutions.
In the Supreme Court of Louisiana, on appeal from the Fifth District Court of
Louisiana Slale Bank vs. James Duplessis, et al. — Appeal from the
Fifth District Court of New Orleans. The following case was tried before a jury, and a verdict rendered in favor of the defendants. The decision of the Supreme Court, on appeal, is a most able and highly important one, involving the liabilities of sureties on the bonds of employees, in banking and other public institutions. We give the opinion of the Court on the points involved, condensing the report of the case, which, with testimony, occupies nearly fifty pages.- N. 0. Commercial Times.
Slidell, Justice.—The defendant, Ledoux, became the surety of James Duplessis, who was appointed note clerk of the bank on the 26th of February, 1840. The bond by which Duplessis and his two sureties, Ledoux and Durive, bound themselves jointly and severally, bears date 29th February, 1840, and is for the sum of $12,000. It declares that, “ whereas James Duplessis had been appointed note clerk, to continue in office during the will of the present or any future board of directors of said bank. Now, the condition of the above obligation is such, that if the said James Duplessis shall well and truly, and faithfully do and perform all and singular the duties of said office of note clerk; shall render a faithful account of all monies and effects committed to his charge, or under his control; and generally, shall save the said Louisiana State Bank harmless from, or on account of any negligence or misconduct of him, the said James Duplessis; then this obligation to be void, or else to remain in full force and virtue.”
Duplessis embezzled from the bank at different times in the years 1841, 1842, and 1843, an amount exceeding $12,000, and the present action is brought to recover from Ledoux the amount of the bond, with interest from judicial demand. There are three grounds of defence presented by counsel :
1st. The petition admits that the first amount embezzled by Duplessis was taken on the 30th day of March, 1841; and consequenily, that he discharged his duty faithfully until that time. It is contended, therefore, that under the bond the defendant is not liable, because, at the date of the first defalcation, his appointment had expired; that his office was an annual office, that his sureties were bound for one year only. Confining our inquiry to the words of the contract, in ascertaining its intention, it would be impossible to recognize the limitation claimed. But it is said that though the words of the bond may cover an indefinite period, yet if by an act of the legislature, or the records of a corporation, it appears that the office was annual, the obligation must be understood as referring to an office so limited.
The argument presented is mainly deduced from the provisions of the charter, with regard to the election of directors. It provides that the directors of the bank shall be annually elected, and forbids the reelection of more than two-thirds of the directors in office at the time of each anoual election; permitting no director to hold his office more than three years out of four in succession. But it does not follow from this legislation with regard to the board of directors, that the mere clerks and servants of the corporation should hold their appointments by the same tenure. If these clerks and servants were to be considered the mere clerks and servants of those who appoint them, the conclusion might be a reasonable one. But we do not so regard them. They are the clerks and servants of the corporation, and the limited term of service of the directors does not control the duration of such appointments. There is nothing in the by-laws of the bank limiting the duration of the place of the note clerk, and his appointment itself was general. These views rest upon high judicial authority. The subject was considered in the case of Anderson vs. Langden, (1 Wheaton, 91,) in which one McLeod was appointed agent of a company for the purpose of encouraging the manufacture and use of domestic merchandise. That case is almost analogous to the present one. In the argument of it, the case of the Commonwealth vs. Fairfax is cited, where the words - so long as he shall continue in office,” in the condition of a sheriff's bond, were not construed to extend to a second and new appointment. Chief Justice Marshall, in delivering the unanimous opinion of the court, said 6 the case of the sheriff's bond is very different. The commission of sheriffs, in Virginia, is annual; of course his sureties are bound for one year only. It is true the directors of a company are elected annually, but the company has not said that the agent shall be for one year only; his appointment is during pleasure. The sureties do not become sureties in consequence of their confidence in the directors, but of their contidence in the agent, whose sureties they are.”
In the case of the Union Bank vs. Ridgely, the suit was upon a cashier's bond, who had been appointed without any specific duration of his office having been fixed. The propositions in that case had been urged ineffectually, and negatived by the court. See 1 Harris & Gill, Maryland reports, p. 432, wherein it is held that the cashier's office is limited only by the duration of the charter, subject to the removal of the incumbent by the directors, and that he was not necessarily an annual officer. The same doctrine is mentioned in the case of the Dedham Bank vs. Chickering, 3d Pickering, 340.
The counsel in the present case had laid much stress upon the 5th section of the charter of the bank, providing for the appointment by ballot of the president and directors, and other officers, agents, and servants. If the legislature had intended that the clerks and servants of the bank should be appointed annually, that the duration of their offices should be for one year only, it is surprising that this should have been left to mere implication. The lawgiver seems to us to have considered the subject of legislation mutual only, with regard to those who were to govern and control the institution, leaving the matter as to the agents and servants of the corporation to the discretion of the governing power. We find provision is made in the charter with regard to the amount of the cashier's bond, but nothing is said as to the duration of his office; yet the same clause which grants the power to appoint the cashier, provides for the appointment of clerks.
It is said, however, that in this case there was a re-appointment of Duplessis, and the counsel reply to show the fact, and as indicative of the construction put by the directors upon the charter, an entry from the minutes of the board, dated 30 March, 1841, being a resolution confirming the clerks in their respective situations. This is but an approval of past appointments, and cannot be construed into a new appointment.
We find nothing in the authorities cited at the bar which conflicts with the view we have taken as to this point of the defence, to wit: The Liverpool Water Company vs. Atkinson, 6 East, 507; Lord Arlington vs. Mericke, 2 Saunders, 411; the Wardens of St. Saviones vs. Bostock, 5 Bos. and Puller, 177; the United States vs. Kirkpatrick; the case of the collector of the poor and church rates in 2 Bingham (Dudley vs. Evans) 32, and in Bigelow vs. Bridge, 8 Mass., 267; in all of which the period of appointment, or duration of term of office, is expressly stipulated and averred. The defendant could not have misunderstood the terms of the bond, and must have considered himself responsible for Duplessis' honesty as long as the bank should think proper to employ him in the capacity designated in the instrument.
2d. The next ground of defence taken by Ledoux is, that he is discharged from all liability to the plaintiffs, because the bank, although called on by the defendant to take legal steps against Duplessis, refused to do so, and allowed him to abscond. Defendant relies on the article 3030 of the Civil code, which is the same as the article of the Napoleon code, and upon the opinions of certain French commentators and tribunals as to its just intendment. Under the Roman law, it seems that the refusal of the creditor to sue upon the request of the surety, would not operate the surety's discharge, I 62 ff de fide ju ss, and Domet, Book III. tit. 4, sec. 2, art. 5.
If we look to the literal language of the article 2037, code Napoleon, and the corresponding article of our code, it would require an act of the creditor to discharge the surety. “The surety is discharged when by
the act of the creditor, the subrogation to his rights, mortgages and privileges, can no longer be operated in favor of the surety." We are of opinion, that under the circumstances of the present case, there has not been such an omission as would authorize us to consider the surely discharged. The surety was promptly notified of the defalcation. if he desired to have Duplessis arrested under the act of 1840, it was fully in his power to have obtained an order of arrest by paying the bank. The point in question was considered in the case of Borette ts. Martin, 16 Louisiana 36, by Judge Martin, which fully sustains the opinion of the present court; see also case of Cougot vs. Fournier, 4 Rob. 423, and Civil code, art. 3026.
3d. The next ground of defence, that Ledoux has been discharged from all liability on the bond in consequence of the gross neglect of the plaintiffs to perform the conditions, expressed or implied, which were incumbent upon them, and which formed the consideration of his contract as surely. In support of this point, the defendant relies upon the by-laws of the bank, and the testimony of the cashier. The by-laws point out the duties of the cashier in taking charge of the cash, and examining the accounts of the bank, and also require the directors shall visit monthly the vaults, and cause an inventory to be made, to be compared with the books, in order to ascertain that they agree therewith, &c. The inquiry into the effect of the facts above stated (the testimony of the cashier) upon the legal right of the parties, resolves itself into two branches, of which the first is, whether these by-laws of the bank are to be considered as entering into the contract of the surety.
They certainly are not referred to expressly in the bond. It was conditioned for the faithful performance of Duplessis' duties; there was no useless qualification that the surety would be bound only in case the directors should vigilanuy discharge their duty according to the bylaws of the bank. As between these parties, we feel bound to say, that the by-laws are directory to the managers of the institution, and do not form a part of the contract with Ledoux. See Angel and Ames on Corporations, and the authorities cited. The question then remains, whether, under the terms of the bond itself, and the general principles of law affecting the contract, the absence of minute vigilance on the part of the directors, unaccompanied by fraud, discharges the surety ?
Ledoux bound himself for the honesty of Duplessis, and he has been unfaithful-not a guaranty that he should be honest if closely watched. A bond with such a clause would not be accepted. The language of Chief Justice Marshall, in the case already cited on another point, is very pertinent here. See also Trent Navigation Company vs. Harley, 10th East. 40; Angel and Ames on Corporations, 317; 2d Medcalle, 241; United States vs. Kilpatrick, 9 Wheaton, 737. We must attribute the verdict of the jury to an erroneous conception of the legal effects of a want of exact and searching vigilance on the part of the cashier, and perhaps of the directors; and probably the refusal to have Duplessis arrested, contributed to turn their minds in favor of the surety, whose case is unfortunate.
It is therefore decreed that the judgment of the court below in favor of Ledoux, be reversed, and that plaintiff recover of said Ledoux the sum of $12,000, with interest and costs.
THE SOUTHERN BANK OF KENTUCKY.
In the Senate of Kentucky, 17 January, 1819.
Mr. Grey, from the committee on banks, made the following report. viz: The committee on Banks, to whom was referred a bill which had been reported to the Senate from a select committee, entitled, “an act lo amend an act to establish the Southern Bank of Kentucky,” respectfully ask leave to submit to your honorable body a report in writing.
By reference to the report of the second auditor of Kentucky, it will be perceived, that the Southern portion of this State, usually called the “Green River Country,” and including those counties West and South from Salt River and “Muldrow's Hill,” (it being that region of the State in which the “ Southern Bank” is intended to operate,) contains taxable property to the valuation of about eighty millions of dollars; whilst the valuation for the whole Commonwealth is only about two hundred and seventy-two millions. Those same counties have also more than 60,000 of the 140,000 qualified voters of the State.
This vast region of country, equal in wealth to nearly one-third of the whole State-paying annually into her treasury almost one-third of the State's revenue-having also, about one-half of the qualified voters, and constituting quite half of the territory of this Commonwealth, has set apart for its portion only about one-eighteenth part of the banking facilities of Kentucky. At present there is employedAt the Branch Bank at Hopkinsville,
$250,000 At the Branch Bank at Bowling Green,
175,000 At the Branch Bank at Greensburg,
125,000 At the Branch Bank at Paducah,
100,000— $650,000 The aggregate capital of the three principal banks located at Louisville and Lexington, will, by reference to their charters, be found to be as follows:
The capital stock for the Bank of Kentucky, $5,000,000
$ 650,000 In the Branch at Frankfurt, .
350,000 In the Branch at Maysville,
450,000 In the Branch at Danville,
220,000 In the Branch at Louisville,
600,000 In the Branch at Paris,
370,000 In the Branch at Covington,
250,000 In the Branch at Richmond,
150,000 In the Branch at Flemingsburg,
100,000 This great inequality in the moneyed facilities afforded by the State to commercial and other industrial pursuits, cannot be claimed because