The Sun.
London, England, 1856-02-02 00:00:00

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,si./ • 75., _ ,tlk,c,.
States, ihat it is impossible a hotel could be carried nn .1%, I.,,,S:Sy\ 4.k
bya-company, inasmuch as no body of men could concW•e°4;.... ~ ti --;
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iiltrate sufficientartkentien•to counteract the neglizopce ir, :, '21;;.--t:".... ':',l*-'
detect the fraud of a walager re.solved to defeat them. t:',...::.;..___ -.;',',:)'-'. ,Cq
is rather remarkable That just 'at this rnonAt the shay ”, „..;7,f,,Fc- 4, 1145,
d:
holders of this country sheuld be entering into an organi-\,'''- ''',,:d- ':'. : -
sation to do that which all Englishmen were supposed si. a s -
capable of doing .before, and which it nin.rfairly be sup-
posed they would have been able to do, had they been ac-
customed to Ceuhnereial association. In France thi prin-
ciple is intter understood, the power of seltgovernineet is
moredeveloped,:and as a natural consequence,-railways are '
conducted at two or three times the profit that they are in
.thit-country:----NO doubt; where' respe risi bill ty • i s-tramh di-
vided and spread his apt to be weakened. The lam,too, must
have its means of enforcing the fultilmentiof obligations,
whether the contractors be one or many. A law that
seizes not only the property, but the person of the debtor,
thLt lodges him in ilrison.en the slightest 4vasion' and
punishes him as severely as if he were a pickpocket or •
footpad' • 'will not ' shrink from confounding ' rind' Ti
chastising the more reckless dishonesty of a corn
menial association, if need be. The crimes it will hate .
to deal with in these instanses are rather the malversation
of the officers than the extravagance or dishonesty. of the
shareholders. 'The latter having deposited their shares
and chosen their managers generally confine their ambition
to a good percentage. It is the treasurer; the directors,
the lawyer& and other officers who are apt to speculate on,
the funds left in their grasp. This is the sort of offence I
the law will have to deal with in the case of partnerships
and large companies with limited liability ; and we have
little_ doubt _everything Will .be done to protect sound _
principle and a salutary reform from the scandelpfgiying
a new occasion for commercial immorality.

(Front the Daily News.)
Last night the House of Commons did .itkielf infinite
credit. The Vice-President of the Board of Trade, in
bringing forward his motion with respect to the Law of
Partnership and Joint-Steck Companies, displayed a grasp' rc
of philosophic statesmanship and a felicity of expression
which are rarely seen within the wallsuf Parliament. And
the effort was appreciated.- It was indeed fitting that in
discussing, perhaps, the greatest question of commercial
reform which has ever been mooted, the representatives of
this great country should forget their party prejudices,
and apply themselves dispassionately to the consideration
of the proposal. The. House -of Commons proved itself
equal to the occasion ; and we must confess that to witness
men of all parties. abandoning, political differences and
uniting to carry a great measure of legal and commercial
reform was singularly gratifying. Nevertheless this very
unanimity may well teach legislators caution. For more
than a century succeeding Ministers and succeeding judges
' have vehemently supported what a e maylnow. perhaps,
call the exploded doctrines in regard to partnership. For
more than a century joint-stock companies, with limited
or with unlimited liability, have been regarded by most
men as hotbeds of fraud and societies for the advancement
.cif- ruin. Only some few years ago the present Joint-
Stock Registration Act was passed,' the elaborate provi-
sions of which, although intended to check fraud and to
curb, speculation, have, iu fact, protected the one and in-
creased the other.

The propositions of the Vice-President of the Board of
Trade ,are twofold—they deal with two different subjects,
and are embodied in two distinct bills. The first relates
to private partnerships, the second relates to joint-stock
companies. Both, however, are founded upon the same
principle—namely, freedom of contract. At present, if A
contracts with B, A is not only entitled to call upon B for
payment, but if Bis unable to pay, and it turns out that
a third party. 0, has supplied li with money, and shares
the profits, A is entitled to sue C to the uttermost farth-
ing. But if C, instead of taking the profits as profits, only
takes a sum proportioned' to the profits, then C escapes all

liability. So that by a technical dodge one man may ren-
ter himself liable to the extent of his whole fortune whilst
another man may enjoy the benefits of limited liability. In
more popular phrase this is the rule of law under which
dormant partners are made liable to the whole extent of
their fortune for the debts contracted by the active part-
ner. A creditor who lends his money or supplies goods to
s man who afterwards turns out io be insolvent may come
upon a dormant partner, of whose existence ho was in
utter ignorance M the time he made the contraeto and he
nay thus obtain repayment out of resources which never
entered into his calculations when he made .the contract.
This absurdity it is proposed by the first bill to abolish—in
other word by a bill of two clauses it is proposed to re-
peal the case of Waugh v. Carver, which originally esta.b•
limbed the liability of dormant partners; and the effect
will be to keep there safe, and to throw the whole liabili-.
ties of a. concern on the active partners. The ruin of bene-
volent old gentlemen who have remained as sleeping part-,
iers in firms; and have been ruined by their benevolence,
will no longer be heard of, and this is a benefit of no slight
importance in a commercial country.
But the second bill is wider in its scope, and will be
more extensive in its consequences.. As Mr. Cardwell ad-
witted, it is impossible to dispute the principle that every
men is entitled to make what contract he pleases, provided
he gives ample notice of the contract which he intends to
make. The right of associating together for the purposes
of bade is not a privilege—it is a matter of mere agree-
ment of contract; and when men talk of the privileges
granted to corporat'ons, it would be more correct to speak
of the rights restored to them which they have been wrong-
fully denied. .The freedom of contracting as you will, and
with whom you will, being admitted, the only.thing which
it is absolutely necessary to provide •for is, that .ample
notice shall be given tohlie public, in crier that they may.
know with whom they are contracting. Men moat not be
deceived into contracting with shadows which will elude
their grasp when they are to be made responsible. 'The
contracting parties must ha certain and definite, and every
facility must be given for the creation of those societies,

snd for the enforcing of their mutual rights.
It is surely a singular instance of misguided legislation
that, although the greatest public works which adorn this
country are the product of segregate capital, that power
of aggregation is hampered by a thousand difficultiee At
present the, law depends ui on the 7 and 8 Viet, c. 1 I
smith e Limited Li ability[Act of last session. The elaborate
machinery of the former act ban proved an utter failuie.
The provisional registration which was required under that
act, and which was intended to give a Parliamentary status
to inch ate coq p. Wes, instead of protecting the public.
powerfully tended 'to deceive them. Shareholders ima-
gined that there was something respectable in being under
the aegis of an Act of Parliament. Their suspicions were
lulled, enormous frauds were perpetrated, and the unde-
fined rights of the parties duritig this state of embryo exist-
ence proved the ruin of thousands. The Act of Parliament
indeed prohibited the sale of scrip, but the Stock Ex-
ehange—which holds the law of honour above the law of
Parliament—dealt with the scrip as if no such prohibition
existed. Men of straw subscribed the deeds, and com•
panies nominally for ono purpose were turned to other pur-
poses. A thousand vexatious and expensive conditions
were imposed, which, even according to the admission of
Mr. Cardwell, have proved utterly nugatory. And even
if the restrictions hail been less annoying then they appear.
to have been, no provision at present exists by which the
poor man can combine his labour and his growl capital for
the purposes of commerce., Even under the Limited Lia-
bility Act of last session aU. share is impossible. And
yet upon no principle whatever is it possible to justify any
such restriction. Bet all these anomalies Mr. Lowe pur-
poses entirely to abolish. lie proposes to repeal the 7 and
3 Vie., cap., 110, and the Limited Liability Act. When
the number of partners is under seven, the cow Act does
not apply, fur it is thought to be better that any number
.of persons below seven should he considered as mere com-
mon partners. But if the number of persons essoriating
together for the purpose of gain is greater than six, and
less than twenty, the Act may he adopted. And if the num-
ber exceeds twenty, the Act must be adopted. The only
associations to which the act does not apply are banks and
insurance companies. In order to form a company under
this act, the only thing necessary is that seven persons
shall sign what is called a memorandum of associatien,
containing the name of the company, the ohjoct for which
it is instituted, the liability of the shareholders, and the
number .of shares held by each. Upon this being Sled
with the proper officer the company is formed. It is a
corporation, and the several shareholders 'e ill incur no
greater liability than is involved in the amount of their
shares. To this memorandum is added a set of bye-laws
which are contained in a schedule to the act.. These bye-
laws provide for the internal management of the associa-
tion, and they may either be adopted simply from the
scedule of the act, or with such changes as the directors
may think convenient. Thus a cemnany may be consti-
tuted at an expense of some N., and the option of forming
uch an association is open to all. The creditors of the
company will be perfectly informed of those to whom they
must look as responsible, for the company will have a cor-
porate name, and provision is made that a list of share-
holders shall he kept at the office of the company itself.
In short, the true principles of economical science, the
freedom of commerce, logical completeness, method, and
succinctness, are the Characteristics of this bold and com-
prehensive measure, which has already extorted the ad-
miration of the House of Commons, and which we hope
will, ere long, by the wisdom of Parliament, be permitted
to stunt as a noble monument to the enlightened spirit of
hose who framed it.