Southern Argus. [volume] (Columbus, Miss.) 1834-1842, 1841-08-24
I.ETTER NO. 2.


10 the Miss. U. Bank, are legally, constitu-
tionaIly, and morally binding upon the State.)
have shown, / think conclnsively, that
there is no time fixed by the chartered the
Union Bank, at VIII ich the mortgages for the
security Of the capital stock or the State bonds,
should be executed. Now according to well
settled principal Of modern jurisprudence cor
porations are to be considered as having only
such powers as are specifically by the act Of
incorporation granted, and as moi possessing
any other, and when take into consideration
the lavish manner in which the legislatures of
the various states, have granted chartered priv
liges, conceive that,no law could have come
in more seasonable era Yes the banking
era, fraught with iInportan: consequences to
the American people, for their unrivalled COM
mercial greatness, if confded to honest men
for their ruin and overthrow, if lavshly, indis-
criminately bestowed upon the corrupt and
vicious.
The powers and rights conferred upon this
bank. are to be kept within the.purview ofthc
act of incorporation, having power by which
it could constitute obhgeesor covenantees, and
having no time appointed by its charter at
which the mortgages were to be made, it be-
came necess airy for it to look to those powers
which were deriVitive and necessary to car
ry into effect the powers especially granted
According to the U. Bank charter, in fact, the
State was the principal, the bank the endoser,
and the stockholders guarantors; guarantors,
not for the State, but for the bank. A guar.
aniee, ina legal sense, is understood to mean
promise or undertaking TO be liable, and
answerabe for the debt ola third person, TO
make such obligation binding there must he
moving from the party with whom it is made
a valuable consideration.
To be answerable for the debt or default o,
third person,is the vouching for the payment
OF a su6sistirg precedent debt, not one fuu rius
tdctus or COMIC. The authorities in the first
place prescribes'that there must be subsisting
precedent debt, due or to become due to the
party to whom the guarantee is made from a
third person, for the reason that TO secure by
guarantee, debt which is to have and re-
ceive future existence, would be % become
liable for that which is indefuable and intanp.
lble, and herein the contract would be inopera.
tive. null and of no effect. Secondly, thers
mnst.be good consideration moving from the
party with whom the contract is made, to the
individual for whose benefits the guarantees
are given, which must have passed before tht
execution of the guarantee, or it must have
been cotemporaneously given to the third per.
son, with the execution ofthe contract, for tn,
reason that all contracts are voluntary agree
ments "made upon good consideration be
tween two or more persons. The law has ne
yer required at the hands of any man the per.
iormance Of something for nothing, II such
system ofethics was established and engrafte,
upon the science ofjurisprudenc, TO be enforc.
cd against the citizens of any government,
would be to establish aErule of civil conduc
sanctlonlng fraud and subtle course of hu
man action nearly equal TO The rules of con
duct which governs the highwayman.
II the law establishes the fact that Their
} must be subssting precedent debt, to iustif
the guarantee ofits payment and no other doc
trIne being provided in the charter It ais
, with equal Clearness declares, that as one @
important requisites OF a.contract is a full AM
good consideration, and the contract is no
complete, until il has passed from the granite,
, to the granter. Here let me make brief ap
, pcation OF this principle of law, to this sub
ject.
The consideration 10 the stockholders, 10
? the guarantees which they were to execute
, Tor the security of the bank against any los
? which it might sustain upon the State Bond
5 was to be the plighted faith of the State to tn
$ bank OF her credit and name as principal. fc
d the sum of fifteen millions five hundred thou
I sand dollars, and until this was given, mas
e much as in the charter, there was no exnres
[ provision to the contrary, the stakeholder
e either in law, or ethics were not required. nc
III would it have been binding for them to hav
e executed their mortgages before the bond
4 were made by the State, and delivered /
IS the bank. mean the mortgages whic
we're to be executed to the bank by the stock
}. holders as guarantees for the payment of tn
State bonds, for the reason which have p,y
en- IN my inst letter, that is, that a surety-shi
presupPoses tho. existence of a principal. az h
), base upon which alone it can rest.
II Here is the clause of the constitution aho,
whichahe whole Statd is convulsed. mo Ia,
shall be passed to raise a loan of money. or +
pledge the faith of the State, for the paymer
or redemption any loan or debt unless 4
shall pass each house of the Legislature an
then be entered on their journals, published !
three newspapers for three months, submitte
: the legislature and passed again.
II The State by the U. Bank charter, the fiftl
section to facilitate the Bank, in the procure
ment of the contemplated loan, pledges he
faith both for the security of the capital and il
e terest, presume Of the U. Bark stock. 81
!. curly as used in this section, does not mea
that the State is to be he'd in the light of
$ surety, for the form Of the bonds gives an IN
qualified contradiction to this construction, bu
:. we are to take the word in its legitimate sens
e lie. providing means, effectual defence or safe
ty. This is the only construction to be plac
! ed upon this word to give it intelhgibility SUI
rounded as it is with its presen: company
The form Of the bonds given in the fifth sec
ton of the charter, is part ofthe acl. and a