Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1872-07-24
FINANCE mi TRADE.
OFFICE OF THE DAILY APPEAL /
Tuesday. July =, 49,
m

OFFICE NJ THE DAILY APPEAL,l
TUESDAY,, July =, 1872 J
FINANCIAL
But A light business was done on Mad
ison street yesterday, and besides Anew
light transactions in stocks, and llgnt
movement in exchange, no items OF IN
terest could be obtained. Discount on
prime business paper was made at lug
- ner cent. and on the street rates
were l392 per cent, with but IlttIe pa
Der Offering. Scarcely anything was
done in gold, dealers buying at 1lS4 for
round lots. In local investments the
only transactions worthy of note were
sales of % shares Memphis and Ohio
railroad stock at l9, 20 shares Peoples
Insurance stock at par, and D transae-
ton in c~omptrollers' warrants al IS, the
latter being below the market price,
our Nashville exchanges quoting the
same at $3.50 buying, and 9l@92 sell
ing. The same paper quotes old issue
Bank of Tennessee money 92(G93 buying
aud selling, and a good request for the
new issue at 5000, adding that il
would be difficult to buy the latter at
the rate quoted, as there was an active
demand and an upward tendency in
prices. For county scrip 80 was paid by
dealers for small amounts, and a mar
gin Of sc, as quoted below, is CHARGED to
Taxpayers. There was some inquiry as
% Mississippi Valley Insurance stock,
and 40G4l were the prices quoted, al
though it is said to be worth more. Mis-
sissippi warrants, city Indebtedness, ETC.,
are dull, as quoted:
Arkansas Levee bonds, nominal.
County scrip, SOg95. Barbour Lewis,
certified, S5GSS. Mississippi and Ten
nessee railroad LIST mortgage, So; ID
mortgage, T21. Memphis city railroad,
IS. Bank of Tennessee money, 92994
for old issue; new issue, 359SS. Ten
nessee C~omptroller's warrants, SO. Lit
tie Rock railroad first mortgage bonds,
80. Memphis city gold bonds, ex-
coupon, so; currency bonds, 5S954
Memphis past due coupons, "a. Missis-
sippi new, 1872, warrants "a. Missis-
sippi Central railroad stock, Ia. Second
mortgage Memphis and Ohio bonds at
50. Charleston railroad stock, 32l.
We find the following notice Of a de-
cision, by the United States District
Court, in bankruptcy, at Philadelphia,
which is of general interest:
1.-THE case was that of Spering VS..
Smith, the National Safety Fund case,
the company having suspended in 1861.
Judge SharswoOd said, In reference
to the responsibility of the directors:
We may adopt upon this point the Lam
cuage Of c. ]. Greene, in Hodges VS..
The New England Screw Company.
I Rhode Island, 3l2.'
ain considering the question of the
personal responsibility Of the directors
we shall assume that they violated the
charter Of the screw company. The
question then viii be, was such violation
the result of mistake as TO their pow
ers. and, if so, did they fall into the
mistake from want Of proper care, such
care a a man of ordinary prudence
practices in his own affairs? For, il the
mistake be such as with proper care
might have been avoided, they ought to
be liable. If, on the other hand, the
mistake be such as the directors might
well make, Notwithstanding the exer-
else of proper care, and IL they acted in
good faith and for the benefit Of the
screw company, they ought not TO be Ii
able. We may say in this case, con-
ceding that the directors did violate the
charter, il was 4 question upon which,
with all due care, they might have made
an honest mistake; and, moreover, it
appears 10y the evidence, and is so re-
ported, that they acted throughout by
the advice of their counsel"
Upon the merits of this decision the
Philadelphia Inquirer remarks:
1.-THE corporation failed under peculiar
circumstances. 1t had managed to OBJ
tain control of considerable amounts OF
money from the deposits Of a large num-
Der Of persons who were induced to take
the risk by promise of the payment OF
an interest of five per cent. on balances.
These Inducements, seconded by liberal
advertisements, brought large amounts
of money, the depOsitOrs not seeming to
consider that an institution which was
limited to one per cent. profit, fits in
vestments were legal at six per cent.
interests, would be tempted to loan
its money al a much higher
rate, even IL there should be great
risk in such transactions. In due time
the company failed, showing assets
quite insufficient, which proved that a
large amount Of the money had been so
iniudiciOusly invested that il was lost,
and the circumstances proving bad
management, ifnot fraud, on the part OF
the Directors. Some of the Btockhold-
ers therefore brought suit against all the
Directors between 1850 and 1861, upon
the allegation that they had misman-
aged the funds, and by want Of good
Judgment jeOpardized the Investments
which were frequently made, in doubt
ful securities, and upon collaterals
which, when the day Of trial came,
proved TO be worthless.
s'The most important point of the de
cision is that these Directors cannot be
made responsible for their mismanage-
ment, unless il can be shown that they
embezzled or misapplied the funds TO
their own particular profit. The law
will only require that officers Of corpO-
ratiOnSO1that character shall actaccOrd-
ing to their best judgment, although that
Judgment may be weak, u~nbusiness-like
aud highly injurious. They are not LA
ble, the Court SAYS: Fol mistakes OF
Judgment, ever though they they may
be 30 gross IS to appear absurd
and ridiculous, and provided they
are fairly within the scope OF
the pOweTs aud discretion cOnfided 10
the managing body" The test as to
whether the directors are 10 be held per-
sonaIly responsible, seems to depend
upon the question whether the acts CON-
piained of were done for the personal
profit Of themselves. If they were no
attempting to use the funds Of the insti-
tuition in their own speculatiOns, il they
were manifestly endeavOring to make
profit for the stockholders, ven although
they were greatly mistaken in Judgment
as to the effect Of their investments, they
cannot be held personally responsible.
1.-The idea of the law evidently Is that
as the directors are chosen by the stock
holders TO attend 10 the business of the
latter, il is intended not TO give them an
authority which may be dangerous al
though they may endeavOr TO 10 theil
lest, but TO protect them against theil
mistakes, or even their recklessness, 81
long a. their acts were not governed by
considerations Of personal advantage
COTTON.
New York advices reported an ad-