APPENDIX, No. 65, (3).

Case and Opinion of Sir James Scarlett, on Act 7 Geo. IV. c. 46, s. 9, 13, being an Act to authorize the establishment of Joint Stock Banking Companies at the distance of 65 Miles from London.

You are requested to peruse the Act of 7th Geo. IV. cap. 46, (a copy of which is left herewith,) and to state your opinion, whether any persons becoming members of a Corporation or Co-partnership for carrying on the business of Bankers under the provisions of that Act, or their separate and private estates, can be made liable to the payment of the bills, debts, &c. of such Corporation, by any proceeding at law, otherwise than by the one to be instituted against any one or more of the public officers of such Corporation, as mentioned in section 9: and.if they or their separate and private estates cannot otherwise be made liable, whether the execution first mentioned in section 13 of the Act is not confined to such persons, being, at the time of issuing it, members of the Corporation, as had continued members from the time the contract or engagement in which the judgment was obtained was entered into. And in all cases where a person, having been a member at the time of the contract or engagement, had retired from the Corporation, or had become a member after the contract or engagement had been entered into, but prior to its completion, or had subsequently become a member prior to the judgment, whether execution can be sued out against the persons or their separate or private property of such last-mentioned parties, without leave first granted on motion in open Court, by the Court in which judgment shall have been obtained, upon notice to such parties, and whether personal notice on such parties will be considered necessary, and, if so, what course is to be pursued in case any such parties absent themselves, so that they cannot personally be served.

1st.-I am of opinion, that no member of a Corporation or Copartnership formed under the Act in question, can be made liable to any judgment, either in his person or in his effects, except by the form of proceeding against some public officer of the Company, pointed out in section 9. 2d. I think the execution, according to clause 13, may be issued against any person who is a member of the Company at the time of issuing it; and in case such judgment

should not be effectual, then against any person who was a member at the time the contract was made upon which the judgment was founded, or became a member before such contract was to have been executed, or was a member at the time the judgment was obtained. This clause appears to me to carry the liability a step farther than the proviso in the first clause, by making any member who became so between the time of the judgment and execu tion, liable to the execution, if he be, at the time of issuing it, a member.

3. If there had been no proviso at the close of the 13th clause, I should have thought that no execution could issue against any person not a party to the record, without a suggestion being first entered upon the record that such a person is a member of the Company; and I am inclined to think, notwithstanding the proviso, that such suggestion would be necessary, and that it could not be made without leave of the Court. But it is clear, that by the words of the proviso, no execution can issue against any person not being then actually a member, without leave of the Court being first granted upon motion.

There was lately a case in the Court of King's Bench, when the Court discharged Sir A. King from an execution issued against him as a member of an Insurance Society in Ireland, because the action had been brought under the Act constituting the Society, against the Actuary, although the Act contained a clause permitting the execution to issue against individual members, without any such proviso as is found in the 13th section. I contended, in that case, that the Court could not permit its process to be used against the goods or person of any individual without some warrant appearing by affidavit, or upon the record, to justify it: and, after some consideration, the Court adopted that principle.

New Street, 4th June, 1832.

J. SCARLETT.

The motion in open Court implies notice to the parties, as the Court would only grant a rule to show cause.

J. S.

year, will, in the opinion of the Directors, constitute an ample provision for the losses above referred to, and also for others which may occur in the course of business.

The number of shares remaining unappropriated is 701; which, by being distributed among such of our Merchants as have not yet become Proprietors, and may hereafter apply for the grant of shares, will serve, as such grants heretofore have done, to strengthen and advance the interests of the Bank, and to extend its public utility.

The total paid-up Capital of the Company is now £289,485; but of this amount, one third (say £96,495) was not paid till the 30th September last; hence it will be observed, that portion of the Capital had only been in hand nine months on the 30th June, to which period the accounts were made up and balanced.

Upon making out and deducting the amount of profits and gains for the year, and after setting apart to be added to the Reserved Surplus Fund, for the object before referred to, such an amount as they have deemed it expedient under present circumstances so to appropriate, the Directors have decided that the remainder, amounting to £17,369: 28. should constitute a dividend, to be declared and paid to the Proprietors; the same being at the rate of £6 per cent. upon the amount of the paid-up Capital of the Company.

In the last Annual Report, reference was made to the intention of establishing Branch Banks in Stockport, Bolton, and in or near Ashton-under-Lyne. Since that time, two Branches have been established, viz. in Stockport and in Bolton; but they have not yet been in operation a sufficient length of time to enable the Directors to decide from experience as to the benefits derivable from the system of Branches in the neighbouring towns; from this, and other causes, they have felt justified in having thus far delayed taking measures for establishing the proposed Branch at Ashton.

The Directors avail themselves of this opportunity to impress upon the Proprietors the indispensable necessity of their individual exertions to increase the number of customers, and to extend the transactions of the Bank. The business of the Bank is at present more extensive, and the accounts more numerous with persons who are not proprietors, or in any way interested in the Capital Stock of the Company, than with the Shareholders themselves; and whilst this circumstance affords a gratifying proof of the high estimation in which the Bank is held by the public, it fully justifies this appeal to the Proprietors for an increase of their exertions, in aid of those of the Directors, (as parties individually and alike interested,) to extend the connections and business of the Bank.

Notwithstanding the unfavourable state of the Laws relating to public Banking, the progress which this Institution has made

strongly confirms the opinion expressed by the Directors in their last year's Report, that the Joint Stock Banking System must eventually supersede that of private Banking throughout the kingdom. The Bank of Liverpool has been established upon principles similar to those of the Bank of Manchester, having a numerous body of Proprietors, and an ample paid-up capital; and it is confidently anticipated that the business connection between that establishment and the Bank of Manchester, will materially promote the commercial interests of both towns, and conduce to an extension of business in both institutions.

Upon the subject of the Laws relating to the Banking System, the Directors would further notice the absurdity and injustice of the existing enactments, which allow important facilities to private Banking Houses, that are not permitted to Joint Stock Banks; even when these latter are established upon sound principles and with adequate paid-up capitals. It is manifest that such Joint Stock Banks afford to the public a security absolute in its character, and such as private Bankers, however opulent they may be, cannot offer. But a still more objectionable defect exists in these Laws, inasmuch as they contain no provision to secure the public against spurious associations, assuming the name and character of Joint Stock Banking Companies. Hence, such companies have the power to inflict upon the public a circulation of notes and bills of exchange, purporting to be based upon a vast capital; whilst no evidence whatever is required of the existence of any capital, as a ground of public security!So long as this very defective state of the Law shall continue to exist, neither a regard for the public security nor to prudential considerations, will be found sufficient to outweigh the cupidity of individual gain;-and Banking Companies, partaking of the character referred to, will continue to force their obnoxious circulation upon the public, to the serious prejudice of trade, and to the scandal of the country. There is, however, every reason to conclude that they will not be suffered much longer to exist, or at any rate not beyond the year 1833, when the Bank of England Charter, and the Laws relating to the Banking System generally, will undergo a revision by Parliament.

Manchester, 11th August, 1831.

THOMAS POTter,

Chairman of the Board of Directors.