The Daily News. Nr. 7369, 13. Dezember 1869. S. 2. OVEREND AND GURNEY PROSECUTION.

The Daily News. Nr. 7371, 15. Dezember 1869. S. 2. THE OVEREND, GURNEY, AND CO. PROSECUTION.

Dec 15

The trial of the Overend and Gurney directors was resumed yesterday morning, shortly after ten o’clock, in the Court of Queen’s Bench, at Guildhall, before the Lord Chief Justice.

The court was not nearly so full as on Monday, when a large number of barristers were attracted by curiosity to witness the opening of this celebrated case, and the public was largely and eagerly represented, even on seats where hearing was next to impossible.

Mr. Lewis, of the Joint Stock Companies Registration Office, produced the memorandum and articles of association, and other documents connected with the registration of Overend and Gurney Company (Limited).

A good deal of discussion took place between counsel and the Judge with regard to the production of the minute books kept by the directors.

Mr. Harding, official liquidator, having been called for the purpose of producing these books, stated, in reply to Mr. M‘Mair, that he was appointed to that office under the winding-up order. He then produced the minute books, and extracts from the minutes of several board meetings held shortly after the formation of the new company were read.

A certified copy of the prospectus having also been produced by the same witness.

Mr. Charles Edward Jones, solicitor to the defendants, produced the original deed transferring the business of the old company to the new one, and proved, as the attesting witness, the execution of it by the defendants. He also produced the second deed.

The Solicitor-General said that as the witness was the gentleman who prepared the deeds he wished them to examine him in order that he might give explanations with respect to them.

The Lord Chief Justice thought it would be best to have the deeds read first and explained afterwards.

Dr. Kenealy said he had always understood that in such a case all that was necessary was to put in the documents.

The Lord Chief Justice observed that the court had to consider quo animo the deeds were made, it being alleged that there was a fraudulent intention on the part of the defendants.

Dr. Kenealy remarked that the documents could speak for themselves.

The Lord Chief Justice said if the court know what instructions were given by the defendants, it would then be in a position to judge how far the charge was borne out.

Sir J. Karslake said there was a third deed, to which neither Mr. Gordon nor Mr. Rennie was a party.

Cross-examined by the Solicitor-General—I myself hold 100 shares in the company. In June, 1865, I learnt from Mr. J. H. Gurney that there were certain negotiations pending for the formation of a new joint-stock company, the intention being to purchase the business of Overend, Gurney, and Company, and I was requested to attend a meeting of the members of the old firm, and some other gentlemen who were to form a new company, at the house of one of the partners, in the St. James’s-square. I was never aware of any negotiations with the National Discount Company. The gentlemen present at the meeting were Mr. J. H. Gurney, Mr. Henry Edmund Gurney, Mr. Robert Birkbeck, Mr. Gibb, Mr. Gordon, and Mr. Rennie. I do not recollect any one else. I did not know Mr. Gordon before, but I believe he was a merchant well known in the City. Mr. Rennie, I believe, was also a merchant in City and was a customer of the firm. He had no interest in the concern. Mr. Gordon was a friend of Mr. Rennie. These men, as far as I knew, were men of position and wealth. So far as I remember the prospectus was the principal topic. The price of the good will of the old firm was discussed. The new company were to have the assets turned over, and were to be guaranteed against losses from the assets being taken over. There was a certain class of assets,—claims on estates in liquidation—which it was not considered expedient to pass over to the new company. They were to be got in by the old firm. Three years and a half was fixed as the period for winding up these claims.

The Lord Chief Justice—What had the new firm to do with that?—They were guaranteed to the new company by the old firm.

The old claims were to be wound up by the old firm, and the proceeds were to form part of the funds of the new company?—Yes; they were to be paid to the new company from time to as they came in. The deficiency was to be a balance against the old firm, and the old firm was to pay interest upon that balance. It was in point of fact a credit.

You say the proceeds as they came in would go to the new firm, and then in the end, if there was a loss, by which I suppose you mean a deficiency, that was to be made up by the old firm?—Yes; there was to be a suspense and guarantee account, and the old firm was to pay interest. In point of fact it was to be a credit.

The Lord Chief Justice—It comes to this, that the new company are to have all the assets; but whereas there are some doubtful ones, those shall not be made over to you; but we will undertake that as they are realised from time to time, the amount shall be paid to you, and as between you and us, the difference between the nominal value and that which they realise, we will guarantee it.

The Solicitor-General—That is it.

The Lord Chief Justice—Shortly, it is this—We guarantee you that the four millions of assets shall realise four millions?

Witness—Yes.

The Solicitor-General—Can you tell me at what sum these four millions were valued at the time of the negotiations? What they were expected to realise?—Something over a million.

And the difference was the subject of a guarantee?—The subject of a guarantee.

Was there a valuation made at the time of the private property of the individuals of the firm, as well as of the property in Lombard-street?—Yes, I believing there was.

Did the discussion proceed on the footing that there would be a considerable surplus?—It did. I was at Mr. Gurney’s, in St. James’s-square, also on two or three subsequent occasions. On the second occasion a prospectus was produced, and that was given to me for the purpose of getting it printed. I think proofs were given to each of the directors for the purpose of corrections. When the prospectus was settled I was instructed to prepare the memorandum and articles of association, and whatever was necessary to carry out what was agreed upon. In consequence I put myself in communication with Mr. Braithwaite, who has large practice in that class of conveyancing. I gave him a copy of the prospectus, and gave him verbal instructions to prepare a deed or deeds for the transfer of the business, explaining to him at the same the arrangement with reference to the accounts that were not to be transferred, and the guarantee to be given by the old firm. I saw him more than once. I was once accompanied by Mr. J. H. Gurney, who came with me to explain the mode of applying the proceeds of the separate accounts, and the technical mode of keeping the accounts. I did not give instructions to prepare two deeds instead of one. It is always left to the conveyancer to determine whether there should be one or more.

Did the Messrs. Gurney, or any of them, give any instructions whatever that there should be two deeds?—Certainly not. I got two drafts of deeds from Mr. Braithwaite. As soon as I got them I had them copied, and took them to Mr. Gordon and Mr. Rennie, in Lombard-street, and asked if I should go through them with them.  Mr. Gordon said it would be more satisfactory that the deeds should be looked over by some independent attorney on behalf of the purchasers. I left the drafts with Mr. Gordon for that purpose, and he promised that they should be looked over by Mr. Messrs. Wilson and Carpmael, the solicitors to the Oriental Bank, of which he was chairman. There were several meetings between the counsel on both sides, and this took some little time. On the 11th of July the first deed was still unsettled, and the second deed had not at that time been touched by Mr. Fooks, the counsel. The prospectus was issued on the 12th of July. On the 12th of July I got a meeting with Mr. Wilson. Inasmuch as the brokers thought it absolutely necessary that we should have the deed mentioned in the prospectus, I got the draft settled at once.

In consequence of this was it that the first deed assumed its present form?—It was.

And it was left at your office to be consulted as the deed of contract?—Yes, the draft was.

Was it some days after that that the second deed was settled between Mr. Fooks and Mr. Braithwaite?—It was. There was a good deal of discussion between them, and it was finally settled between them about the 25th of July. They were afterwards executed together on the 27th of July.

Do you remember whether it was discussed at those meetings whether the members of the old firm should contribute to a greater or less extent according to their means if there was a deficiency?—It was so understood.

When Mr. Boyes, the secretary, applied to you for the deed to be shown to the members of the Stock Exchange, which deed did you send them?—The first.

Why did you do that?—Because I conceived it was the contract between the vendors and the new company.

Had any of the defendants anything to do in giving you instructions to do that?—None whatever.

Had you any motive or intention whatever to conceal the second deed?—None whatever; there was no concealment about it.

Then I take it that, in sending the first deed to the Stock Exchange, you did it on your own judgment and responsibility?—Entirely.

Were you, shortly after the formation of the new company, instructed by John Henry Gurney to prepare a deed between the partners of the old firm of Overend, Gurney, and Co., appropriating shares among them, and fixing their proportions?—I was.

Did it appear to you at that time that there would be a very large surplus after all the debts were paid?—The figures were not before me at the time, but I understood that the surplus would be large if the estates were disposed of.

What was the estimated amount of the surplus?—700,000l.

Did you know as a fact that John Henry Gurney had 10,000l. a year?—Yes, and a great deal more.

Dr. Kenealy having objected to this kind of testimony,

The Lord Chief Justice observed that if the case were a civil one the defendants would of course have an opportunity of making their won statement, and it seemed to him that their private solicitor, who as such was acquainted with the state of their affairs, should say what he knew about them. The witness must of course confine himself to what was within his own knowledge.

The Solicitor-General (to witness)—Do you know that the whole of John Henry Gurney’s property was sold?—Every shilling’s worth of his private property has been sold, and what was realised has been paid into the concern. Mr. Edmund Gurney’s property was sold for 170,000l. or 180,000l.

Cross-examined by Mr. Serjeant Parry, who appeared for Henry Ford Barclay—Mr. Barclay became a director at the last moment, just before the issuing of the prospectus. He was then a director of the Cable Construction Maintenance Company. He signed the articles of association in rather a hurry, being about to go away in the Great Eastern, which was to lay the Atlantic Cable. The first meeting of the directors at which he was present was held on the 8th of August, 1865. He was not present at any of the discussions about the prospectus, and his name did not appear in it. I had instructions to prepare a third deed, dated the 2nd of August, in consequence of a stipulation on the part of Mr. Barclay that in the event of the bankruptcy or death of either of the parties, before three-and-a-half years had elapsed the estates should be realised without waiting. The object of that third deed was to afford greater security to the new company. Mr. Barclay held 1,000 shares, and I understand that he held them to the last. I don’t know of my own knowledge that he has paid 45,000l. upon his shares. The third deed was not actually executed till September.

Cross-examined by Sir John Karslake—No promotion money was to be paid. Mr. Gordon had independent legal advice. After the draft was prepared I saw him at the Oriental Bank. I left a copy of the draft with Mr. Gordon and Mr. Rennie, on the understanding that it would be placed in the hands of their own solicitors.

Re-examined by Dr. Kenealy—Was solicitor to the two Messrs. Gurney and Mr. Birkbeck. Had an interview with them before the Limited Company was brought out, about the prospectus. That document was the principal topic at the first meeting of the Overend and Gurney directors. There was a general conversation about a surplus, the calculations with regard to which were based on some figures that were not produced. Thought it was Mr. Barclay who introduced the question of a surplus. The directors had satisfied themselves that there was a surplus. Did not remember any discussion on the point; the thing was taken for granted.

Were you aware that the concern had been losing half a million a year for some years?—I was aware that there had been large losses, but was not aware of their extent.

Examination continued—Did not recollect the defendants making any allusion to their losses, but was aware at the time that they had been losing considerably.

Did it not occur to you to ask them what their losses amounted to?—I understood that they had satisfied themselves that the guarantee would be perfectly ample, and that there would be a surplus.

Did they say so?—On a subsequent occasion. The subject at that time was the settlement of the prospectus.

Why did it not occur to you, when they were promising a guarantee, to question them about their losses?—Because I was perfectly satisfied that they had a surplus.

Did you say nothing about their assets or liabilities?—No; I simply asked for the form of prospectus; it did not fall within my province as a solicitor to question them about their assets.

Was not the 4,000,000l. part of the assets made over to the new company?—No; I did not consider so.

Examination continued—Gave the prospectus at once to counsel, with whom he had two or three interview. His instructions to Mr. Braithwaite were based on the prospectus. Mr. Braithwaite considered two deeds necessary for carrying out the transfer and the general arrangements, and he should not think of dictating to counsel in such a matter. Very material alterations were made in the drafts. The prospectus was issued as soon as possible after the preparation of the original deeds, because there was a general election pending, and the directors thought that if it did not come out at once it might have to be put off for months. Mr. Fooks was a possible candidate.

Have you ever known any other case in which several deeds were prepared?—I have known no other case similar to this. Believe that the Stock Exchange require that all the documents connected with the transfer of a business should be laid before them. The second deed did not seem to him material in reference to the transfer. It was not at variance with the first deed. The provisions of the second deed were in conformity with those of the first; they were collateral, that was his view.

Reading the first deed as a lawyer, would you not have supposed that the assets were to be realised within a short period?

The Solicitor-General objected to the question!

Dr. Kenealy thought it was necessary, as tending to show whether the two deeds were antagonistic.

Was there anything, in your opinion, in the first deed to show that the assets would not be realised within a short period?—No.

The Lord Chief Justice observed that the second deed referred to the first.

Sir J. Karslake said it excepted such accounts as required to be excepted.

The Lord Chief Justice remarked that by the first deed all the old assets were to be transferred under a certain guarantee, while the second provided what should be done in case the new company declined to take those assets. The old company was to get what it could for those assets within three and-a-half years, and pay it over to the new company, and any difference between the assets realised and the amount transferred was to be made up out of their private property. The value of the assets to the new company depended on the value of the private property of the guarantors.

In further examination, the witness denied that when some shareholders visited his office on one occasion to inspect the original deed, two other deeds were kept back. What they saw was, he said, three drafts of the same deed.

In reply to the Lord Chief Justice, the witness said the private estates sold after the stoppage realised 1,800,000l.; adding that they are sold under disadvantageous circumstances, and when money bore a high rate of interest.

Sir J. Karslake read passages in the second deed, to show that the 500,000l. to be paid for the good-will and the guarantee out of the private estates were carried to a suspense account.

Mr. Vallancy Lewis and Mr. Ernest Robinson were then called, but neither of them answered.

Dr. Kenealy said these witness were intended to prove the bankruptcy of some of the debtors in the excepted accounts, but perhaps the proceedings in bankruptcy would be admitted.

The Solicitor-General said the defendants being charged with conspiracy ought not to be called upon to admit anything.

The Lord Chief Justice said this was a part of the case where, having proved the prospectus, they might call persons who were induced to take shares from having read it.

Dr. Adam Thom was then called, and examined by Mr. Moir. He said—I am a member of the Canadian bar, and now reside in this country. On the 13th July, 1865, I purchased 60 shares in Overend and Gurney (Limited), but before I did so I got a copy of the prospectus from my brokers and took it back to them the next day. I produce the certificate of the shares. They run from 45,430 to 45,489, and though I was only a transferee they are all made out in my own name. They bear date the 15th November, 1865, the last day on which the instalment was payable. I paid 900l. in all—420l. to my bankers, and 240l. twice over to Barclay, Bevan, and Co., the bankers appointed by the company. Since the stoppage I have paid 1,500l. in calls. I was induced to take shares from the statements in the prospectus and my knowledge of the respectability of the partners, more particularly Mr. Gordon. One of the inducements to me to take shares was the first clause in the prospectus that 15l. a share was all that would be required, and for that reason I took exactly as many shares as I had funds for. Then another clause that I thought favourable was that Mr. Gordon, who was chairman of the Oriental Bank, was to be a director, and that three of the members of the old firm were to be directors of the new company. I was also influenced by the high hereditary character of the house. The stoppage of the company took place on the 10th of May, 1866. On the 11th of June, 1866, I was present at a meeting of the shareholders held in the largest room of the London Tavern. Mr. John Henry Gurney, after some question, was placed in the chair. A voice asked whether all the directors were present, and Mr. J. H. Gurney replied that they were. There were 500 or 600 persons present, whether they were all shareholders I did not know. During the proceedings I put some questions. I asked Mr. Jones whether any pains had been taken to ascertain the value of the private estates of the partners before the transfer. No answer was given, other business was going on. I repeated my question a second time, and then I asked a third time, and then Mr. J. H. Gurney was about to answer, but I said I could not receive an answer from him. After Mr. Jones had said what he intended to say, Mr. William Rennie rose and stated, in terms which I do not specifically recollect, that they had estimated the value of the assets, he and his friends the new directors, and after estimating the value of the assets, and some other items, such as the goodwill and the value of the buildings, there remained a deficit of about 1,400,000l., and that without investigating the value of the private estates in any way whatever, he and his colleagues had assumed that they must be worth at least 1,400,000l. I rose immediately, and asked whether I was to understand that the private estates were to answer only the 1,400,000l., or they were to be applicable to any deficiency that might occur; and the answer was—from whom it came I cannot say—that the private estates were liable to an unlimited extent. Mr. Rennie stated, I think, nearly at the beginning of his address, that what the company wanted at the time of the transfer was fresh capital; and he also stated, as a proof of the good faith of the directors, that at the time of the collapse every one of the directors had been a large shareholder and depositor. There was also something said by Mr. John Henry Gurney which I had rather not state, as it came in the nature of a confidential communication. No documents were produced. The great point before the meeting was as to the private estates. Mr. Lawrence, a solicitor, stated that the private estates would be in our hands in the course of a month. I had no information of the state of the company. I had made up my mind to a total loss, and went to the meeting more from curiosity than anything else. A committee of investigation, or defence association, was appointed, and I was the chairman of that association. It had its origin in some Chancery proceedings of Mr. Dundas. I had no knowledge of a second deed. I first heard of it about the 7th or 8th June, 1866. The meeting was held on the 11th June, and the report of the liquidators, which was issued a few days before, spoke of it, and of a suspense and guarantee account. I did not see the first deed before I became a shareholder. After I had made up my mind to take shares I called at Mr. Jones’s office, in Mildred-court, to look at the deed, and I was told that the deed had been removed from that office to 65, Lombard-street, the office of the bank, immediately after the allotment. This was on the 4th August, 1865; the allotment, I believe, had been made somewhere about the 30th of July. I made no further inquires about the deed. I did not see the first deed, but I saw the second. I saw them both together about the beginning of September, 1866. If I had seen the second deed before I became a shareholder I should not have become one. Viewing the first deed by itself, I should not be alarmed at the expression, “excepted accounts;” but in the second deed I found excepted accounts under the head of suspense and guarantee accounts. The character of all the items in the second deed would have staggered me, although the amounts were not stated. Beyond that, there is a postponement of personal guarantee in the second deed which would have alarmed me. In the original deed there is nothing about postponement till the 31st of December, 1868. There is clearly a discrepancy between the guarantee as given in the first deed and the guarantee as postponed in the second.

Sir J. Karslake objecting to the course of evidence,

The Lord Chief Justice said he thought the witness was entitled to refer to the sections as the ground of his position.

Witness continued—The first, thirteenth, and seventeenth sections and the schedule would together. I am quite satisfied, have deterred me from taking shares. As chairman of the committee of investigation, I have paid special attention the accounts of both the old and the new company.

The witness being about to refer, as was understood, to some figures of his own,

The Solicitor-General objected to such a mode of proceeding, observing that the witness could only refer to Mr. Harding’s (the liquidator’s) balance-sheet.

Dr. Kenealy contended that the witness, having examined the accounts, was entitled to give the result.

The Lord Chief Justice thought he could only refer to the statements of the official accountants.

The Solicitor-General admitted that the witness had a right to refer to accounts, but maintained that he should not be allowed to make a speech upon them.

Cross-examined by the Solicitor-General—I felt this country in 1832, and returned to it in 1839, and again in 1854. I was appointed chairman of the Shareholders’ Defence Association. I subscribed nothing; I gave my time and labour. I did not take the defendants into Chancery; Mr. Dundas and Mr. Peek did that. I believe there were affidavits in the proceedings, but no answers.

Are you master of your own situation?—Perfectly so.

Are you permitted to be so?—If I were “permitted” I should not be master of it.

Have you “in that spirit of fair play which is part and parcel of your being” refused to let the defendants have the full benefit of their own affidavits in the Chancery proceedings?—I see you are reading from a passage which I have written. I am not at all offended. (Laughter.) I have all along wished to act in a spirit of fair play, and to have those affidavits and affirmations put in.

As you are master of your own situation, will you consent to their being put in now?—Mr. Lewis objected to their being put in, and that is my reason for acting as I have done.

I want to know whether you are master of your own situation?—I am master of it as far as wishes go.

Will you tell me why they are not put in?—Because my legal adviser thought it would be prejudicial.

The Lord Chief Justice—Prejudicial to what?—Prejudicial to the investigation of this case.

The Solicitor-General—Am I to understand that nothing would satisfy you but the condemnation of the defendants? Do you not think it is essential to a thorough investigation that, in that spirit of fair play which you say is part and parcel of your being, they should have the benefit of their own affidavits and answers?—I have said so, and I say so still.

Who prevents their being put in?—My legal advisers.

Have you had any consultation with them?—I am not bound to state.

Who prevents their being put in?—My legal advisers.

Who prevents their being put in?—I cannot tell you.

Which legal adviser prevents it?—I cannot tell you; it has been a subject of consultation.

You cannot tell me which of your legal advisers prevents you from doing that which is essential to fair play?—I cannot tell you at this moment.

What do you mean by saying that your legal adviser prevents their being put in?—Mr. Lewis—

The Solicitor-General—No, Mr. Lewis is not your legal adviser now.

Witness—The other legal advisers—

The Solicitor-General—Who?

Witness—I have had no legal consultation.

Then how have you gathered their sentiments?—I presume from their not putting them in.

Do you not know that if they were put in an acquittal in this case would be inevitable?—No answer.

Dr. Kenealy said he knew nothing about what was being referred to.

The Solicitor-General (to witness)—One gentleman has repudiated having had anything to do with the matter; who is the other?

Witness—I have submitted that they might be put in, and have wished them to be put in, but I have had no conversation with the legal advisers as to why they are not put in.

The Solicitor-General—To what would it be prejudicial?—Prejudicial to the investigation of the case.

Then you don’t agree that it is required by that spirit of fair play which is part and parcel of your being?—That is their opinion.

The Lord Chief Justice—When was it that you gathered that such were the sentiments of the legal advisers?—I have put the documents into their possession, and have instructed them that the thing it to be done if they deem it desirable. If I had been allowed to conduct my own case here, I most indubitably would have put them in.

The Solicitor-General—Do you know that in those Chancery proceedings some or all of the defendants have been cross-examined?—I have been present at part of the cross-examination of John Henry Gurney, and at part of the cross-examination of Robert Birkbeck.

Do you know that all the defendants were cross-examined?—I do.

And do you know that in every single case in which they have been cross-examined the decision has been in their favour?—I cannot answer the question.

Cross-examination continued—He had not applied to the Court of Chancery for money out of the estate to carry on these proceedings, but he believed an application was made by Mr. Lewis in his name. He presumed that he was liable for the costs of that application. He had had the administration of the prosecution fund, and was not aware that any portion of it had been applied in paying the cost of Chancery proceedings. He believed that no part of the prosecution fund had been applied to any other purpose than the prosecution itself.

By Sir J. Karslake—I have known Mr. Gordon by reputation ever since I came to England in 1863. I knew him in the character of chairman of the Oriental Bank. I know now that he was also a director of the Union Bank. As soon as I instituted proceedings against him I did all I could to remove him from the chairmanship of the Oriental Bank, and I made a motion to that effect. I had not then charged Mr. Gordon with conspiracy, but proceedings had been taken against the liquidators in Chancery. He was not then dispossessed of his office, but he subsequently resigned. I do not know the circumstances under which he resigned. I never went to the company’s office for the purpose of seeing any document. I did not see the memorandum and articles of association before I bought the shares. The office of the company was about five minutes’ walk from the offices of the association. I saw the articles of association in my broker’s office when I bought the shares.  I saw one of the articles which stated that, excepting balance-sheets, no accounts or documents should be seen by any shareholder. Mr. Gordon had 200 shares. If he has paid the whole of the calls on them, which I believe he has, he has paid 8,000l.

Re-examined by Dr. Kenealy—I do not know whether Mr. Gordon got the money out of this concern. I have understood a large amount was put down for salaries. Mr. Gordon, being a director, had 500l. a year. I am a shareholder in the Oriental Bank, and it was only in consequence of Mr. Gordon’s connection with this matter that I desired to remove him from the chairmanship of that bank. In that I acted alone. The document cited just now by the Solicitor-General was a pamphlet written by me a few months ago. My present legal adviser is Mr. Dawson. I instructed him to put in the documents, and he said, “We shall consider how far it is desirable.”

The Lord Chief Justice—You say if you had seen the second deed you would not have bought the shares, but you tell us at the same time that you did not see the deed mentioned in the prospectus?—Yes.

Now I ask you as a fair dealing gentleman if in the prospectus the word had been “deeds” instead of “deed” would that have made the slightest difference?

Witness—I do not think it would.

Mr. Thomas Clark stated that in August, 1855, he purchased 40 shares of the company, at a premium of 17/8, and held them down to the stoppage of the company. Had paid upon them to the present time 1,600l. Before he bought the shares, had seen a prospectus at the office of the solicitor of the company. He asked for one, and he believed they gave him one. He took it home. Bought the shares on the general faith that Gurneys were respectable. Applied for 60 shares, and got none. Knew now of the second deed, which he called the secret deed. If he had known of it at the time, should not have applied for shares.

Cross-examined by Sir J. Karslake. I read the prospectus. I saw the paragraph in it that the memorandum and articles of association, and the deed for the transfer of the business, were to be seen at the offices of the solicitor. I did not ask to see the deed. I did not know of the secret deed, and I did not ask to see the other. Before I bought the shares I ran my eye through the memorandum of association. I saw nothing unusual in it. I did not read the deed; in fact I was careless of the matter.

By the Court—I suppose if it had said “deeds” instead of “deed” it would have been exactly the same thing. You would have relied on the respectability of the Gurneys?—I should.

When you are making application for shares in a concern that is likely to be beneficial, do you make it a practice to go and look at the deeds, or do you take it for granted?—I have taken it rather for granted.

Mr. William Peek deposed that he saw several of the prospectuses of the company, and purchased 2,000 shares, and had paid 94,754l. on them, reckoning the costs. Was induced to buy them from the respectability of the firm of Overend and Gurney and the names of the directors. Since the failure, had heard of the second deed. If he had known that it contained the clauses referred to by Mr. Thom he should not have taken shares.

The Solicitor-General objected to this class of evidence. It was not a question as to what acted on the mind of the witness, which might be a ground of an action for damages, but this was a criminal proceeding.

The Lord Chief Justice said it was clear that there was a statement of accounts of which the witnesses knew nothing, and a deed of which they knew nothing. If the prospectus had referred to two deeds, or a dozen, or twenty, he did not think that these parities would have thought it necessary to inquire about them. But he did not think he could shut out from the case what would have been the effect on the mind of men of business if they had known of this second deed.

The Solicitor-General said he did not wish to shut it out of the case. On the contrary, he considered it part of the case; but this evidence was merely hypothetical.

The Lord Chief Justice—Part of the necessary allegation of the prosecution is that a certain course of conduct was adopted on the part of the defendants for the purpose of misleading the public, and this matter of the second deed is alleged as part of the fraudulent scheme, part of the mode in which the alleged conspiracy was to be carried out.

Mr. Serjeant Ballantine—Certain facts are stated, and certain conclusions are drawn from those facts. A man says, “I was told so and so, and I handed over a certain sum of money.” The question is whether that is the cause.

The Lord Chief Justice—There is a great deal more than that. It is alleged that if it had been known that this second deed was in existence, the public would have been deterred from taking shares. But I will talk the matter over with my brethren, and if this kind of evidence is tendered to-morrow, I will state whether we think it should be received.

Examination continued—On the 10th of May, 1866, while passing the office, he saw that it was being shut up. He went in and saw Mr. Birkbeck. Mr. Birkbeck said the Bank of England had refused assistance, adding as a reason, that there was an old grudge between them. Witness expressed his surprise and said the failure would produce a crash which would extend through the whole kingdom, to which Mr. Birkbeck made no particular reply. He said the directors had just applied to the Bank. Witness was then residing in Liverpool, and had just run up to town. He remarked to Mr. Birkbeck that if everything had been honest in the matter all would come right. Mr. Birkbeck said nothing in answer to that. The next day witness called again and saw Mr. Gibb. A day or two previous Mr. Gibb had told him that they would divide 7 per cent. dividend, the accounts having been made up, and shown profit to that extent. Mr. Birkbeck gave assent to that. Witness then went on to speak of the assurance he received from the directors as to the amount that would suffice to meet liabilities.

Cross-examined by the Solicitor-General—Chancery proceedings against the liquidator had been commenced in his name to settle the question of liability. Dr. Thom did not assist him. At the time of the stoppage money was at a high rate. The term “tightness” was comparative, and money could have been had then on good security. Could not say how much Mr. Birkbeck told him that he had invested in the bank, but the smallness of the amount struck him. Was not intimate with Mr. Gibb, but knew him as a business man. That gentleman’s name influenced him, with other names, in investing. Bought shares in the market. Saw the prospectus, and bought on the strength of it.

At a quarter to five the court adjourned till this morning.

W. B. Scott, one of the jury, asks up to correct the statement of the Globe, which we reprinted yesterday—that he took the affirmation as a Quaker, instead of the oath. This was not the case.

The Daily News. Nr. 7372, 16. Dezember 1869. S. 2. THE OVEREND, GURNEY, AND CO. PROSECUTION.

Dec 16

The trial of the Overend and Gurney directors was resumed yesterday morning, shortly after ten o’clock, in the Court of Queen’s Bench, at Guildhall, before the Lord Chief Justice. So far as numbers are a criterion the interest was again further diminished, the court being by no means inconveniently filled.

The first witness called was Mr. Richard Barrow.

Examined by Mr. M. Moir—Was a magistrate of the county of Derby. Having seen the prospectus he purchased in the autumn of 1865, 200 shares at from 2 to 4 premium. Paid 15l. a share before the winding up of the company, making altogether 3,000l., since which he had paid additional calls, making a total of 8,000l. Was induced to take his shares by a belief in the statements of the prospectus.

If you had known before you took shares what you now know is contained in the second deed, would you have taken them?

The Lord Chief Justice (intervening) said since the court rose on the previous day he had discussed that point with his brother judges, and they were all of opinion that such evidence was not admissible.

Mr. John Home, examined by Mr. Yelverton—Resided near Carlisle. On seeing the prospectus in the Money Market Review he applied for and obtained 120 shares. Paid 15l. a share up to the winding up, and had paid two 10l. and one 5l. a share since. Was induced to purchase by the names of Messrs. Gurney and Mr. Barclay. Henry Edmund Gurney was assistant manager of Mr. Haydon’s bank at Carlisle.

Cross-examined by the Solicitor-General—Knew Mr. Head, who married into the Gurney family, and had some confidence in him. Was aware that he had 1,000 shares, and had understood that he continued to hold them. Purchased his shares about the middle of August.

Re-examined by Dr. Kenealy—It was on the names in the prospectus that he relied when he bought his shares. Mr. Head’s connection with the bank did not make the slightest difference.

Mr. Charles Beard, examined by Dr. Kenealy—Resided at Bury St. Edmunds, and held shares which had cost him altogether about 6,300l.; that amount including a premium. First saw the prospectus in the Times, about the 13th of July, 1865. Came up to London, and went to Mr. Jones’s (the company’s solicitor’s) office, in St, Mildred’s-court. Was shown into a room, and a clerk there pointed him to a table on which lay two or three copies of a deed. Asked for a copy. Did not apply at once for shares, but went home.

The Solicitor-General objected to the course of the examination.

The Lord Chief Justice thought the witness might give evidence about asking for a copy of a document which he had been invited to inspect.

By the Lord Chief Justice—The clerk told him the copies which he saw on the table were all alike.

By Dr. Kenealy—Some days after he called at his banker’s, at Bury St. Edmunds. The banker told him that he had some prospectuses. He told him (the banker) that he had seen the deed, and he filled up a form of application for fifty shares. Took shares because he thought the concern must be a sound one.

From what did you draw that conclusion?

The Solicitor-General objected to the question.

The Chief Justice observed that the names of Messrs. Gurney must have been well known in the eastern counties.

By Dr. Kenealy—Applied for the shares under the influence of the names he saw in the prospectus.

Cross-examined by the Solicitor-General—Was not influenced by his banker in the matter.

Cross-examined by Mr. Giffard—The clerk simply stated that the copies he saw were all copies of one deed.

Mr. Frederick William Lewis, a clerk in the Joint-Stock Companies Registration Office, produced a copy of the winding-up order of the Court of Chancery, dated the 22nd of June, 1866; also the articles of association of the Atlantic Royal Mail Steam Packet Company (Limited), registered on the 8th October, 1858, and a resolution, dated the 18th of July, 1864, for the winding up of that company.

The Lord Chief Justice said he did not see what that company could have to do with this case.

Dr. Kenealy observed that its assets formed part of the 4,000,000l. transferred to Overend, Gurney, and Co. (Limited).

The witness then produced the winding-up order in the case of the East India and London Shipping Company (Limited), registered on the 3rd of August, 1864.

Mr. William Smith, a clerk in the Chief Registry of the Court of Bankruptcy, produced a deed of inspection in the case of Kelson, Tritton, and Co., dated 30th June, 1865, together with a list of the debts, amounting to 430,000l.; a deed of inspection in the case of Halliday, Fox, and Co., dated 15th February, 1865, the debts amounting to 507,370l.; a deed of inspection in the case of Messrs. Lawrence and Fry, dated 12th July, 1864, the debts amounting to 391,228l., Overend and Gurney appearing as creditors for 245,000l.; a deed of inspection in the case of Leopold Bruzewitz, dated 13th June, 1866, the debts amounting to 403,850l. 9s. 6d., Overend, Gurney, and Co. appearing as creditors for 135,334l.; a deed of composition in the case of James Cox and Sutton, dated 8th June, 1866, the debts amounting to 7,663l.

The Solicitor-General objected that the copy of the last deed had not appended to it the signatures of the parties.

The witness observed that they were certified copies.

The Lord Chief Justice did not consider the objection a reasonable one.

The Solicitor-General thought the objection material, because it was sought to show what the assets were at the time when the deed was executed.

The Lord Chief Justice said if it were insisted upon the original must be produced.

The witness also produced the inspection deed of Joseph Brown Rigby, dated July 8, 1866, and registered on the 3rd August.

The Lord Chief Justice—But here is the same difficulty.

The witness also produced a deed of inspection and arrangement of J. E. C. Koch, dated 19th December, 1866.

The Lord Chief Justice—But where is the use of going on with them.

Mr. Moir—I am happy to say this is the last.

Mr. Ernest Robinson, clerk in the Bankruptcy Court, produced the proceedings in bankruptcy in the cases of David Leopold Lewis, there being two adjudications, one dated 4th January, 1865, and the other dated 7th June, 1865—(the first being on his own petition, and the second on the petition of his creditors); of Astley and Co., the adjudication being on the 19th May, 1865; of George Garraway, 9th March, 1866; of Charles Joyce and Co., May, 1865; of Charles John Mare, of Millwall, 21st December, 1867.

The Solicitor-General objected that the latter could have nothing to do with the case, the transfer to the limited company being in July, 1865.

The witness also produced the proceedings in the case of John Stuart, of the Millwall Ironworks; the adjudication being on the 18th May, 1865.

Mr. Oswald Howell, accountant, was then called. He stated that he carried on business in Cheapside, and was employed on the part of the shareholders and creditors to investigate the accounts of Overend, Gurney, and Co. The company began to incur heavy losses in 1859; but there were heavy losses in 1857. There was a large division of profits in 1858, and he thought subsequent events proved that those profits had not been earned.

Have you formed an estimated of the average losses from 1860 to the time of the transfer?

The Solicitor-General objected, saying that the witness could only speak from the books, and the question was not pressed.

The witness stated that in 1858 he found there was a division of profits to the amount of 240,000l.; in 1859, 360,000l.; in 1860, 216,000l. In 1861 the partners received their salaries, amounting to 3,600l., but there did not appear to have been any profits divided.

The Lord Chief Justice—Is there not a profit and loss account?

Witness—There is no entry showing whether profit carried to the profit and loss account was really profit, because the bills that were running might have been bad. Large advances for instance were made on certain accounts, and the interest was carried to the profit and loss account, but the advances might be a loss.

The Lord Chief Justice—There is another important element. In 1861 they divided a profit. What was there at that time to show that the debts which proved a loss were bad debts?

Witness—That could only be known by the firm themselves.

The Lord Chief Justice—How did they know they were bad? Many a man is believed to be a good solvent debtor, but we may easily believe from a combination of circumstances that which at one time appeared to be a good debt becomes a bad one. What is there to show that in 1858 there was anything to lead to the conclusion that these debts would turn out to be bad?

The Foreman—Will you show us any account that was presented to the partners once or twice a year showing the profit or loss.

Witness—There are no actual balance-sheets.

The Solicitor-General—How do you know?

The witness said he had asked Mr. Boyes for all papers, and had found no balance-sheet. He proceeded to state that in 1862 no profit was divided, but the partners received their salaries of 3,600l. There were four who received salaries that year. In 1863 there was no profit divided, but 4,600l. was paid as salary to five partners; in 1864 no profits were divided, but 4,000l. was paid as salary to four partners. In 1865 no profit was divided, but in June 1,500l. was paid to the partners for salaries. From the general ledger of the old firm it appeared that the old firm debited the new firm with 15,284,641l., which included securities, 8,507,661l.; advances, 1,070,573l.; country bankers, 5,658l.; general ledger, 13,303l.; bills in hand, 1,345,135l.; cash, 120,394l.; suspense and guarantee account, 4,013,896l.; discount ledger, 1,969l.; single deposits, 3,648l. The limited company was credited with the following items:—Cash on loans, 9,606,422l.; country bankers, 1,909,458l.; discount ledger, 25,628l.; advances, 64,074l.; balances in general ledger, 435,380l.; rebate on bills, 72,610l.; bills payable, 38,773l.; private ledger balances to the credit of the private partners, 1,053,715l.; single deposits, 2,676,579l. That account was taken from the old book. In the new book the debtor and creditor sides were reversed. There did not appear to have been any other liabilities pressing on the firm. In one of the bill books there was a large amount on account of bills rediscounted. That book was called “An Abstract Diary of Bills.” The bills rediscounted by the old firm amounted to 7,177,000l. Bills rediscounted were bills for which the firm had received the money. In the event of those bills not being taken up by the parties, Overend and Gurney would have had to meet them, but with the exception of 2,000,000l. connected with the Norwich Bank, the bills were, he believed, first-class ones. On the 31st of July, 1865, the bills on hand amounted to 17,201,370l. Of that amount 7,177,000l. consisted of bills rediscounted; 1,000,000l. odd was bills on hand, and 8,000,000l. odd was transferred to the new company. In his judgment 3,000,000l. of the 8,000,000l. of bills transferred were of an exceptional character, being connected with such names as the Millwall Ironwork Company, and Bruzewitz. Lane, Hankey, and Co. were in the books for 2,000l.

In your judgment were many of the bills of an unreliable character?

The Lord Chief Justice did not consider such a question a proper one.

Dr. Kenealy said he would put the question in this form—In your judgment were the bills generally good or bad ones?

The Solicitor-General objected to such a question.

Dr. Kenealy (to witness)—Are you acquainted with the commercial status of the merchants of the City of London? (Laughter.)

The Lord Chief Justice said he did not consider an accountant a competent witness on such a point. His lordship then asked the witness if he had traced out the history of the bills in question in connection with the new company?

The witness replied that he had, and that it appeared in the books.

Examination continued—Had gone through the various items which made up the suspense account. The amount transferred would not amount to 15,000,000l. if the suspense account were deducted from the total. Assuming the defendants’ statement to be correct that they did not transfer the 4,000,000l., the assets could only amount to 11,500,000l. The 4,000,000l. was entered in the new company’s accounts as a debt from the old firm to them. Produced a cash-book of the old firm, containing the particulars on the 31st of July of 4,484,000l., the suspense account. There were amounts deduced which left a balance of 4,213,000l. On the same day that that amount was debited to Overend, Gurney, and Co. there was brought to the credit of that account 1,053,715l., being the balance standing to the credit of the partners in the private ledger of the old firm. That reduced the account to 2,910,000l.

By the Lord Chief Justice—That amount was not actually paid, but was credited.

Examination continued—The money actually due was 2,910,000l. It did not include the 250,000l., part of the purchase money of the business. After deducting that the balance would be 3,160,000l. There was a credit of 250,000l. for good will which was not deducted.

The Lord Chief Justice observed that that sum was not to be deducted, but to stand as part of the guarantee.

The witness said he had mentioned it because it appeared in the account.

Examination continued—The proceeds of the sale of shares amounted to 172,633l.; 561,000l. was brought into the new concern by the old firm from their private property and monies outstanding. After making all deductions the balance due from the old firm of Overend and Gurney to the new company on the 31st of July was 2,150,000l. On the day of the suspension of the new company the amount of that account was 2,970,000l.

The Lord Chief Justice said what had to be ascertained by the court was the real position of the company at the date of the transfer. The charge against the defendants was that they induced persons to take shares by fraudulent representations. What the directors did after the transfer had nothing to do with the issue.

Dr. Kenealy said he wished to trace the course of the liabilities.

The Lord Chief Justice said that might form the basis of another indictment, but could not affect the present question.

Dr. Kenealy desired to show the mala fides of the defendants—that after the transfer of the business they advanced money to support houses in which they were interested.

The Lord Chief Justice did not see how the circumstance that the defendants continued to make bad debts after the transfer took place could affect the question before the court.

Dr. Kenealy said he wished to prove that what were handed over as assets were in fact not assets.

The witness being about to make some remark,

The Lord Chief Justice told him that the court would hear him when he was asked a question, adding, “Don’t you make yourself too much of a partisan.”

The Solicitor-General observed that he did insist on this connexion of the old firm with the houses to which money was said to have been advanced being proved.

A long discussion took place on this point, the Solicitor-General saying that what was attempted to be proved was that the members of the old company who were directors of the new advanced money belonging to the new firm in order to improve the position of the old debtors, but that, he contended, was no form of the indictment.

The Lord Chief Justice said it seemed to him that where a person was charged with a fraud the subsequent application of the money might be an ingredient, as showing what were the motives for the original transaction. He overruled the objection, and said he was sorry it had been made. It was then arranged that the printed deposition of the witness taken before the Lord Mayor, and which he stated was correct, should be taken so far as the aggregate of the new advances to the old debtors was concerned, and in that deposition it was stated that the old debts had been increased by advances made by the limited company by 615,700l. 18s. The witness went on to state that the gross profits of the new company during the ten months of its existence were 223,638l., but of this upwards of 130,000l., made up of two items of 62,000l. and 68,000l., was made up of interest on the suspense and guarantee account. 92,000l. in round figures was the profit resulting from the transactions of the limited company. The real profit was only 4,552l. On the 2nd May Mr. Barclay transferred his deposit of 71,000l. to the Norwich Bank. Mr. Rennie had twenty shares. He was a member of the firm of Cavan Lubbock, and Co. There were bills discounted and loans made by the new company to Cavan, Lubbock, and Co. to the amount of 691,000l. Of this 200,000l. was for loans several times renewed. The remainder was discounts of commercial bills. Loans which had been renewed four or five times constituted the larges portion of the 200,000l.

Cross-examined by the Solicitor-General—Took a great deal of interest in this matter, but not more than he usually did in such cases. As regarded the expenses of the Defence Association, he only acted as secretary, and therefore gave no guarantee. Did not now belong to any firm; ceased to do so two or three days before he went into the Bankruptcy Court. The firm to which he had belonged were accountants. He had not published any work on this subject. Three years ago he made a report to the Defence Association, and that was published. Believed he had not stated anything which was not a fact.

Was it a fact that every member of the old firm of Overend and Gurney except Mr. Gibb drew out every shilling he had before the stoppage?—Very nearly. I never said that the directors sold their shares.

Did any one of the directors withdraw from any liability which they had entered into?—I did not say that they did; what I did say was that they withdrew their deposits.

Did not every one of them suffer heavily?

Dr. Kenealy objected to the question.

Cross-examination continued—Believed that every director except Mr. Gibb withdrew the whole of his money from the concern.

By the Solicitor-General (reading from a printed book)—You state here that Mr. Gibb held 800 shares, adding, “This gentleman is the only director who did not withdraw the whole of his money from the concern prior to the collapse.” Is that true? The witness appearing to hesitate, the Solicitor-General said—Did you say that Mr. Gibb was the only director who had not withdrawn the whole of his money?—I stated that Mr. Barclay held 1,000 shares.

Is the statement which I have read true?—In the way in which you put it—

Is that true?—Well, perhaps it is a strong way of putting it; but my attention was never called to it before.

The Lord Chief Justice (to witness)—The effect of what you said seems to be, that while Mr. Gibb had retained his interest in it every other director had got rid of his. Let me advise you not to trust yourself to publish anything more of that kind, because it can have but one interpretation. It is going a long way to give you credit for having meant anything else than what you appeared to mean. The greater the importance of the truth being known, the more careful you ought to have been in what you said.

Cross-examination continued—His report was called a “Report of the Defence Association.” (A printed document was here handed to the witness.) That was not intended for publication, but for the information of his friend Mr. Kampo. Did not send him a copy of it, but felt sure he saw it. Believed Mr. Kampo was a great debtor to Overend and Gurney. The document was printed at the expense of Mr. Kampo. Believed that Mr. Lopes ordered the printing; did not know whether that gentleman was another Spanish grandee. Never asked his friend what he wanted the thing for. Did not write that book for the express purpose of its being used in an action in the courts of Spain. Mr. Lopes, who was Kampo’s agent, attended to the printing. He (witness) never distributed one copy. He would swear that. This document was only an appendix to the report made to the Defence Association. Had not separated between the money dealing and bill booking business, and the illegitimate business of the old firm. The new firm did not continue the latter. Had made a calculation with regard to the business of the new company, but had not separated between the two kinds of business; would have been extremely difficult to do so. Could not tell whether or not the money dealing and bill trading business was sound on the 31st July, 1865.

The Lord Chief Justice said that had all along appeared to his mind a very material point.

Cross-examination continued –Was unable to say whether or not the money dealing and bill-broking business yielded a profit at the time. That might have been ascertained with great labour.

Is it not correct book-keeping to enter the interest that becomes due from time to time on a doubtful debt till the debt is written off?—Yes, until the debt is known to be bad or doubtful.

The Lord Chief Justice asked the witness whether, when something was receivable on a debt, the interest might not fairly be entered?

The witness thought it could not be treated as profit.

By the Solicitor-General—If a debtor become bankrupt interest would be charged in proving the debt. He did not charge interest on the debt which was bad or partially bad before bankruptcy. The effect of what was done in the present case was to make the old firm of Overend, Gurney, and Co. liable for interest on 4,000,000l. to the new company. Charging interest was wrong, because the debts were bad. The statement of the interest account was made out by the liquidators, but they took it from the books.

The Solicitor-General—Did you wish to convey to the jury the impression that the statement with respect to the 68,000l. of interest of which you spoke was published by the directors and not by the liquidators?—Certainly not.

The Lord Chief Justice—When you told me that that statement, showing that they had made a profit of 203,000l., was published to the shareholders, did you mean to convey the impression to my mind that it was done by the directors?—Certainly not.

The Lord Chief Justice—Then all I can say is that your language was singularly unfortunate—(applause)—for you did convey that impression to my mind.

Cross-examined by Mr. Mellish—Mr. Barclay held 1,000 shares, and paid all his calls—45,000l. being the amount. On the 1st of January Mr. Barclay deposited 90,000l. in the Old Bank, in two sums, without any security. Prior to the 2nd of May, 1866, the amount had been reduced to 70,456l., and he then paid in what made up exactly 71,000l. On the 2nd of May the sum of 71,000l. was transferred in the books to the account of Gurney’s Bank at Norwich. That was a private bank, and Mr. Barclay had shortly before become a partner in it. Therefore, it was a transfer of Mr. Barclay’s private account to another bank. That was what he (witness) meant by withdrawing the deposit. Gurneys withdrew exactly 71,000l. Between the 2nd and the 9th of May Gurney’s of Norwich withdrew 95,000l. At the stoppage there was a balance in their favour of 41,325l. There was 65,000l. standing in their names on the day when the 71,000l. was paid.

Cross-examined by Mr. Giffard—Had not taken the trouble to ascertain how the 200,000l. advanced to Cavan, Lubbock, and Co. was secured, but believed it was secured on West Indian estate. Every farthing of it had been paid so far as the united company was concerned. Every one of their bills under discount had been met in the regular way.

Re-examined by Dr. Kenealy—Had no knowledge of the debts of Mr. Barclay except from the books and sworn statements which he had seen. Asked Mr. Boyce, the secretary of the old firm and of the limited company, for the security books, and he replied that there were none.

Was it right to charge interest on 839,000l. due from a company which had been wound up years before?

The Solicitor-General objected to the question.

The Lord Chief Justice thought that general questions like that could not be put in the present case. The debt had been transferred, and interest was chargeable upon it, because otherwise the account to be settled at the end of three and a half years could not have been settled.

By the Lord Chief Justice—Had never known an instance like the present before.

A discussion here took place between Dr. Kenealy and the judge as to the admissibility of the deeds of inspection, &c., relating to debts to old firm. The Chief Justice held that the certificate of an attorney was not sufficient in such a case as that, but thought it would be best not to press the objection. The Solicitor-General said he would consult his client on the point.

The Solicitor-General—The witness said there were no balance-sheets; but here they are. (Mr. Boyes produced some documents.)

The Lord Chief Justice—It had a very nasty appearance when it was said that there were no balance-sheets.

Mr. Howell—I do not see that this is a balance-sheet at all. Oh, yes, there is a balance struck at the end. I applied for every document connected with the company, but these were not shown to me.

Mr. Ernest Robinson was recalled. He produced the proceedings in the first bankruptcy of C. J. Mare, dated 7th February, 1865; C. Garratry, dated 10th January, 1865.

Mr. Levine, secretary to the London Stock Exchange, produced the original application for the documents connected with Overend, Gurney, and Co., and the list of documents he received from the company in accordance with the requirements of the Stock Exchange.

Dr. Kenealy—Was there more than one deed accompanying the documents?

Witness—Only one.

The Lord Chief Justice—As a general rule, where one company transfers to another, is it expected that any deed of covenant between the company that sells its business and the company that buys it shall be produced?

Witness—Yes.

A Juryman—If there were three deeds, would you expect them all to be produced?

Witness—Yes.

The court was then adjourned, at a quarter to 4 o’clock, until a quarter past 10 this morning.

The Daily News. Nr. 7370, 14. Dezember 1869. S. 6. THE OVEREND, GURNEY, AND CO. PROSECUTION.

Dec 14

In the Court of Queen’ Bench, at Guildhall, yesterday, before Lord Chief Justice Cockburn and a special jury, the trial of John Henry Gurney, Henry Edmund Gurney, Robert Birkbeck, Henry Ford Barclay, Henry George Gordon, and William Rennie, the directors of Overend, Gurney and Co. (Limited), and who were charged with conspiracy to defraud the shareholders of the company, was commenced. The defendants, who surrendered to their bail, were accommodated with seats in the space between the front bench for the counsel and the Judge. The case appeared to excite considerable interest, but nothing like so much as was exhibited when the preliminary proceedings were taken before the Lord Mayor nearly a year ago. Nevertheless long before the hour fixed for the trial, twelve o’clock, many persons had assembled round the doors of the court, the place allotted to counsel was filled, and immediately after the doors were opened the court was full, but it was not crowed. Mr. Adam Thom, the prosecutor, occupied a seat amongst the junior counsel. The counsel for the prosecution were Dr. Kenealy, Q. C., Mr. Macrae Moir, and Mr. Dawson Yelverton. For Messrs. Gurney and Birkbeck—the Solicitor-General, Mr. Hawkins, Serjeant Ballantine, and Mr. J. C. Malten; for Mr. Barclay—Mr. Mellish, Serjeant Parry, and Mr. Montagu Williams; for Mr. Gordon—Sir John Karslake and Mr. Ledgard; for Mr. Rennie—Mr. Giffard, Q. C., Mr. Poland, and Mr. Jardyne.

Dr. Kenealy said he appeared for the prosecutor. The indictment charged the six defendants with conspiracy to induce others to become shareholders in a certain com-pany by publishing and circulating a prospectus containing false representations. Since this case was put into his hands on Friday afternoon he had endeavoured to discover whether there had been any similar case, and he found none like it but the South Sea scheme, which was the disgrace and the scandal of the beginning of the last century. The South Sea scheme originated in the sanguine dreams of the projector, and he believed everything was conducted on the most honest principles until persons came in who were always waiting for things of this description. But these defendants appear to have entered on this scheme with a cold-blooded determination to swindle the unfortunate shareholders. It was said when the case was before the Lord Mayor, that such of the defendants as were not actually present at the time the fraud was concocted ought not to be charged. But that not the law. In De Berenger’s case, Lord Ellenborough held that in order to find persons guilty of conspiracy it was not necessary to show them together, but all that was necessary was to show that they were actuated by the same wicked purpose, and that they combined to carry it out. The defendants John Henry Gurney and Henry Edmund Gurney were, he understood, cousins; Mr. Birkbeck and Mr. Barclay were also connected with them as relations; and the other two defendants, Mr. Gordon and Mr. Rennie, although not relatives, were closely connected with them in private and commercial matters. The old firm of Overend, Gurney, and Co. was established at the close of the last century; it had a wide reputation, was highly prosperous, and was conducted with great honour by the ancestors of the two first-named defendants. He believed that when the members of the old firm retired the concern was making a profit of 125,000l. a year. But when the new partners came in a different state of things seemed to have prevailed. They appeared to have entered into some of the most extraordinary speculations that could possibly be conceived. They made themselves partners in many things; they covered the seas with their ships, and ploughed the land with their iron roads. This was perfectly right and proper if they had done all this at their own expense; but when they heard that these proceedings entailed a loss of 500,000l. a year for five or six years, and that these wild and reckless speculations were not entered upon with their own money, but with the money deposited with them—amounting to five millions—their speculations assumed quite a different aspect. This was their position in 1865. The greater part of the five millions which had been lodged with them on deposit was at call within seven days. Their position was of the most ruinous kind. By the figures in their own books it appeared that the liabilities for which Overend, Gurney, and Co. were responsible a short period before the formation of the new company were 15,207,581l., and the only real assets which they had to meet these liabilities under the most favourable auspices were 12,075,000l., so that there was a clear deficiency of upwards of 3,000,000l. in the spring of 1865. Being in this condition, being liable to be called upon any day for the 5,000,000l. deposited with them, and having only 120,000l. actual cash in hand, their proper course was to call their creditors together, or to go through the Bankruptcy Court. He believed they were actuated by a strong desire to save the house, if possible, and probably they shrank from the ordeal of laying their accounts before their creditors. If they had done so there would not have been more than would have given the creditors sixpence or a shilling in the pound. Instead of doing this, they combined to defraud innocent persons. They appeared first to have contemplated a bargain by which they would have amalgamated with a company called the National Discount Company. That however did not come to anything, but there had been found a prospectus in the handwriting of Mr. Gordon, one of the defendants. This prospectus had corrections in it in the handwriting of one of the Messrs. Gurney. It stated that arrangements had been made for the transfer of the business of Overend, Gurney, and Co. on terms which could not fail to give satisfaction to the shareholders; that three of the present partners had agreed to become directors of the new company, thus securing the valuable connection which the firm had so long enjoyed. It also stated that there would be no promotion money paid either directly or indirectly, and that allusion might also be made to the advantages of the immediate enjoyment of so large and profitable a business. Now, there never was a more false statement, for the business, though large, was most unprofitable. In this document, as it was first written, all the existing liabilities were said to be “most amply and satisfactorily guaranteed;” but lest the guarantee should be held to include real and personal estate, there was substituted for that phrase, “under the guarantee of the vendors,” which simply implied a personal guarantee. While this conspiracy was being concocted, Daniel Gurney addressed a letter to his nephew, John Henry Gurney, who was the principal defendant, in which he said that he had done the right thing in negativing the proposal for continuing the Overend and Gurney business. The date of that letter was May 25, 1865. On the 24th of June, the uncle wrote to his nephew, that he was sincerely pleased that everything was in good train for forming a new company, that he supposed “no Baring could be obtained,” and that care should be taken that nothing dishonourable was done with regard to the marriage settlements of his family. It was a pity that he did not at the same time consider what might be dishonourable with respect to the public. In a third letter, dated the 4th of July, occurred these words: “I accede to your proposal of giving security, but you must bear in mind that in case of a real catastrophe all my family and myself would be in total destitution.” Did not that expression, “real catastrophe,” written by the uncle to his nephew, bring home to the latter a clear view of what was impending? Notwithstanding that, however, this defendant was still found acting in concert with the others. Having failed to induce the National Discount Company to entertain their proposals, the defendants set about establishing a company of their own, and in that way shifting their own liabilities to the shoulders of others. On the 12th of July they registered the Overend and Gurney Company provisionally as a limited company. They probably thought that by calling themselves a limited company they entirely altered their position; but the new company consisted at first of just the same persons as the old one, and the shareholders were so far merely mythical persons. By one of the article of association of the new company it was provided that John Henry Gurney and Robert Birkbeck should be managing directors at a salary of 5,000l., and that after a certain amount of dividend had been earned, they should have one-fifth of the profits in addition to their salary. On the 13th of July a prospectus was issued, of a limited liability company with a capital of 5,000,000l. in 100,000 shares of 50l. each, and an intimation was made that only 15l. per share would be called up. Then followed a list of the directors. The company was, it was stated, formed for the purpose of carrying into effect an arrangement which had been made for the purchase from Messrs. Overend, Gurney, and Co., of their long-standing business, which was to be transferred in consideration of the payment of 500,000l. for good-will, one-half in cash and the other in shares. When the parties were negotiating with the National Discount Company they did not dare to say anything about good-will, well knowing that they could not obtain a single farthing. Then there was to be no promotion money; and this distinction was a very important one. No time was lost. The business was to be handed over to the new company on August 1; and it was further stated that the vendors guaranteed the shareholders against any loss on the assets or liabilities transferred, that the members of the old firm retained a large pecuniary interest in the new concern, two of them—Henry Edmund Gurney and Robert Birkbeck—having undertaken to manage the business, and that “the directors would give their zealous attention to the cultivation of business of a first-class character only.” This last pledge they fulfilled by fraudulently using the money of the shareholders to sustain an utterly rotten business. The total number of shares allotted to the public was to be 83,334, the remainder 16,666 being reserved for the directors and distributed amongst them. In order to keep the supervision in the hands of these gentlemen, an arrangement was made by the 70th clause of the articles of association which secured to them a majority at the board meetings, so that if any independent directors should be elected they would have no power. There was transferred from the books of Overend,  Gurney, and Co. a long series of items which were treated as absolute cash, but which belonged in fact to a rotten account. Those items amounted in the aggregate to 4,000,000l. The first item was 839,345l. 19s. for the Atlantic Royal Mail Steam Packet Company, in liquidation. That company was wound up in 1864, yet a million was there transferred to the new company. Another item was “T. S. Begbie 17,292l. 14s. 8d.” Mr. Begbie was what was called a blockade runner, and this transfer was about as valuable as the transfer of the ashes of cigar. The next entry was, “Leopold Bruzewitz, 54,382l. 19s. 3d.” That man’s position was well known to these defendants, and at the time of the suspension he was indebted to them to the amount of 135,000l. The next entry was, “W. Chapman, 17,243l.” He paid a little, his account having been reduced at the time of the stoppage to 14,854l. 11s. 4d. Then came “Carlisle, Parr, and Co., 26,294l.” They went into liquidation in November, 1864. Then came, “the Greek and Oriental Steam Company, 144,144l.” According to the evidence of Mr. Harding, that had been treated in the books of the old company as an irretrievable loss. It was a speculation entered into by the old company along with a Mr. Stephanos Xenos, and was a ruinous thing; and the directors knew perfectly well that no money was to be expected from it. The next entry was “East India and London Shipping Company, 406,264l.,” which was like the others treated as cash, though the company had been ordered to be wound up on the 3rd August, 1864. Then came “A. F. G. Guarantee, 27,028l.,” from which nothing had been received. Then came “F. and G. Gunaway, 190,977l.;” then followed “Halliday, Fox and Co., 64,628l.” But that firm had executed a deed of inspection on the 16th February, 1865. The next entry was 331,765l., as due from Thomas Howard, though he had been actually discharged by a deed, dated January, 1863, from every farthing of that debt. The next entry was “Charles Joyce, 78,728l.;” and of this sum there appeared to have been received near 40,000l. Then came, “John Jones, 22,353l.;” but instead of that sum having been since obtained from him, he had been allowed by the limited company to increase the debt to 31,200l. at the time of the stoppage. The next entry was “Kelson, Tritton, and Co., 291,391l.” They executed a deed of inspection on the 30th June, 1865, and at the time of the stoppage the debt had been decreased to 197,503l. Then there was an entry, “J. E. C. Koch, 243,069l.,” for which there was no justification whatever, for Mr. Koch was a mere servant of the defendants, and claimed to be a creditor instead of a debtor. The next entry was “Levant and Black Sea Steam Company, 38,211l.” The company was in liquidation, and the debt had been slightly lowered. Then came a large item, “David Leopold Lewis, 341,559l.,” of which at the time of the stoppage only a little more than 7,000l. had been paid. This was followed by a still larger item, “Millwall Iron Works and nominees, 510,368l.,” which had increased at the time of the stoppage to 566,489l., and the securities which the old firm held had actually been hypothecated before the transfer. Then came W. M’Cormack, 13,174l., which stood at the same amount at the time of the stoppage; Manuel and Co., 83,093l., the firm having been bankrupt in 1863. Then came Mauritius Mortgage, 25,284l., which had slightly increased at the time of the stoppage; Old Ebbw Vale Company shares, 11,112l., the loss on which at the time of the stoppage had increased to 48,705l. Joseph Rigby, 20,500l.; C. Reynolds, 15,000l.; Peto and Betts, “Azad,” 14,000l., which was all moonshine, there being no such claim against that firm; Sichel, Alexander and Co., 51,921l., since increased to 107,393l.; and Von Dadelszen and North, 2,845l., which had increased to 33,690l. The total amount was 4,003,016l., and the new company seemed to have expended 615,000l. extra in order to keep up those rotten speculations which the defendants had entered into. The defendants appeared to have made provision of every kind to secure themselves. He had already called attention to the fact that there was a deed mentioned in the prospectus which was issued by the defendants.

The Lord Chief Justice—As I understand, part of your case is that they gave in as assets a list of debts which were in point of fact absolutely worthless; and if these were held out to the public as assets when it was proposed to the public to take shares I quite see the relevancy of this statement. But what I want to see is, how far that was brought to the knowledge of the shareholders so as to operate as an inducement to take shares.

Dr. Kenealy—In this way: that the old company transferred to the new company 15,000,000l. of assets, of which 4,000,000l. are worthless.

The Lord Chief Justice—Just so; but where does it appear that the public were told that there was so much liability and 15,000,000l. assets?

Dr. Kenealy said it would appear by the first deed that they gave the now company all the assets. This was declared by the deed that could be seen and inspected by the shareholders, and if there had been only one deed, that would be in favour of the defendants; but it would be found that on the same they made a secret, private, and fraudulent deed, which was discovered merely by accident, and it was never communicated in any way to the public, or to those who became shareholders. By the first deed it was stated that 500,000l. was the consideration paid for the goodwill of the business; but it was provided that that amount should not be at once paid over, but should be kept in hand as a material guarantee for the complete performance of the covenants of the defendants. The second deed, which bore the same date as the first, was discovered by accident, being designed to conceal important matters from every human being except the defendants. It referred to what were called “exceptional accounts,” making up the 4,000,000l. odd of which he had previously spoken. It was therein provided that the defendants should have from the 31st of July, 1865, till the 31st December, 1868, to get rid of the liabilities in those excepted accounts. Thus, by a secret deed, they obtained nearly three years and a half, and he maintained that that was a fraud. There was nothing which gave the slightest inkling of the matter in the first deed. Further, for the purpose of concealing from the general public the fact that there were rotten securities to the amount of 4,000,000l., it was provided by clause No. 3 that all the books, accounts, and papers relating to the business transacted by Overend, Gurney, and Co., previous to the 31st July, should remain in the custody and under the control of the old directors. They had already got six of their own body on the board, but they seemed to have thought that the shareholders might elect five independent directors, and therefore care was taken that in that event the new directors should be kept in ignorance. Whether that was honest or not was another question for the jury; to him it appeared to bear only one aspect. In the first deed there was only a general exception; but in the next clause of the second deed they set out fully what they meant to except; his inference being that the words in the first deed were used solely for the purpose of delusion. The 11th clause was one of the most extraordinary clauses that he ever read. It provided that all sums of money which the directors might receive on that suspense account should be placed to the credit to the defendants; that is, they were to be placed to their credit whether the amounts were paid over to the limited company or not.

Sir J. Karslake said that was not the case.

Dr. Kenealy said the jury as commercial men would be better judges of what was intended than himself, but that was his inference. Clause 13 was a most singular clause. It spoke of “sum of money which the said limited company may from time to time lend or advance to Overend, Gurney, and Co., for the purpose of enabling them to wind up and close such excepted accounts.” Was there anything in the prospectus about the new company lending money for such a purpose? If it had been implied there that Overend and Co. were in such a position that they could not realise their securities, would the public have advanced a single farthing? This was a provision to enable them to do what they had previously covenanted to do, and it was thereby admitted that they were at the time insolvent. This deed, which was no doubt drawn up by a very astute person, contained a further provision which he thought would satisfy the jury of the guilt of the defendants. Secrecy was almost always a badge of guilt. It seemed to have occurred to the farmer of that deed that there was a danger of its being brought before a court of law or of equity, and the whole of the transactions exposed to the public. To prevent this it was provided by clause 20 that if any dispute should arise it should—the word was not “may,” but “shall”—be referred to arbitration. The parties to that deed and their successors and assigns were thus precluded from ever bringing those matters before a court of law, to which he might add that if a dispute occurred, the two arbitrators were sure to be friends of the parties, and in case of a difference between them they would appoint a third friend.

The Chief Justice said the terms of the schedule referred to by the learned counsel seemed to be large enough to embrace the whole of the debts.

Dr. Kenealy—Yes. The contention of the learned counsel on the other side would perhaps be that they were also excepted in the first deed; but the answer to that was that the description in the second deed was so ample as to leave no room for doubt, while that in the first was vague and uncertain. What was done blinded the eyes of the shareholders, and left the directors three years and a half, during which something might possibly turn up to prevent their criminality from being discovered. The schedule referred to the Millwall Ironworks Company, and other companies, by name. Provision was made that no general meeting of the shareholders should be held until 10 months after the formation of the company. The defendants knew perfectly well that they could not face a general meeting, and the whole of their proceedings being tainted with fraud, and hence they took care that no shareholder should ascertain anything earlier than they could possibly help. His learned friends would no doubt contend that the second deed was perfectly honest. Why, then, was it kept secret; and why was it that the letter sent by the directors to the Committee of the Stock Exchange about appointing a settling day was accompanied only with a copy of the first deed? Even in the minutes of their own proceedings the directors were silent about the existence of the second deed. So anxious, indeed, were they to conceal what was going on, that on several occasions the secretary (Mr. Slater) was requested to withdraw.

The Chief Justice said the first deed provided for the transfer to the new company of all the assets, securities, and debts of the old firm of Overend, Gurney and Co., with the exception of such of the outstanding debts as the new company should decline to adopt; and the second deed had reference, as he understood, entirely to the debts so to be excepted. The schedule enumerated those debts and the provisions of the second deed had reference from beginning to end to what was to be done as between the two companies in regard to those excepted debts. The new company had no interest in anything that related to those debts, except so far as it was desirable that they should be wound up and liquidated or got rid of, so that they would not stand in the way of the respectability of the new company. The whole of the 4,000,000l. was, he understood, comprised in the schedule.

Dr. Kenealy—Yes.

The Chief Justice continued—They were not held out as available assets, but were included in a distinct account as not having passed to the company, but remaining still with the defendants.

Dr. Kenealy said he contended that that was a fraud, because the debts were transferred to the new company as part of the assets.

The Chief Justice—That is another matter.

Dr. Kenealy said what occurred showed that the defendants well knew that they were in an insolvent state. On the 2nd of August one of them, Henry Ford Barclay, made a third deed, which was likewise kept secret, and by which it was provided that in case either of the defendants should become bankrupt during the three years and a half that arrangement was not to continue. If Mr. Barclay knew of the insolvent condition of the parties, that was an element of guilt. Well, after the great flourish of trumpets about the company there was a great demand for shares, and in a short time they rose to 9 premium, at which price many persons, no doubt, realised large profits. Among those who became shareholders was Dr. Thom, the prosecutor in this case. Dr. Thom was a doctor of law and a member of the Canadian bar. Having acquired a fortune in Canada, he came to this country, and being dazzled by the Overend and Gurney prospectus, he obtained some shares. Feeling very strongly on this subject, he wrote a letter to an eminent person, and he wished now to express his regret if he said anything in it that unjustly wounded the feelings of any one. Having been deluded into purchasing a number of shares, he paid, like others, his calls, a process in which a great deal of money had been swallowed up. To show the entirely hollow nature of the transactions of the new company, he might observe that in nine months they discounted bills to the amount of 56,000,000l., and that upon that discount there was a pretended profit of 220,000l., which was, in fact, made out of interest on the 4,000,000l. of bad debts. The net profit from other sources was only 4,000l.; so that for 4,000l. the new company paid 3,120,000l. The defendants kept up the delusion to the last moment. One of the witnesses would state that a director told him that there was about to be a dividend declared of 7 per cent. A rumour got abroad that the Messrs. Gurney were beginning to sell their private estates; that was immediately followed by a run upon this wretched company, and the company was smashed; otherwise the directors would no doubt have carried out their promise of a dividend. The stoppage took place on the 10th of May, 1866. When it occurred the cash-book of the company was found to be mutilated; figures of great magnitude were erased and others substituted for them. One of the defendants, Mr. Barclay, was found to have at the time of the stoppage, a deposit of 10l. 4s. 4d., having on the 2nd of May, eight days before the crash, withdrawn upwards of 70,000l. Mr. Gordon, another defendant, had no deposit when the bank suspended; and Mr. Rennie, whose own banking firm had an unsecured deposit of 56,000l. with the old firm of Overend and Gurney, withdrew it a few days after the new company commenced business. Had it not been for the energy and perseverance of Dr. Thom and one or two other gentlemen, the defendants would have escaped scot free; but owning to those qualities which distinguished him as a Scotchman, and the possession of which had secured for his countrymen the highest posts in the field and in the law, the case was now brought before a jury. On the 23rd of February, 1866, Mr. Birkbeck, writing in reply to a letter from a large shareholder, named Peek, said, “No one can have been more annoyed at the rumours relative to the company than I have been,” adding, “I can assure you the company has not lost anything,” and that the business was going on satisfactorily. On the 14th of April he wrote in a similar manner. Now this was the case which he (Dr. Kenealy) was about to present to the jury, and he thought that if he proved it there could be no reasonable doubt in the mind of any one that a clear case of fraud and conspiracy had been made out. He knew that the bar had never been better represented than it was on the other side; he knew that he had to contend against great ability, eloquence, and legal knowledge; but his case was so very simple, so very plain, so exceedingly clear, that to his mind the whole of that 4,000,000l. which he had mentioned, represented an entire, absolute, and positive fraud, and so far as he could see there could really be no doubt about the matter. A case of such great importance to the commercial community had, perhaps, never before in our time, been presented to the public. Here was more than 3,000,000 of money sacrificed all at once, not legitimately sacrificed, not even lost in speculation, but absolutely juggled out of the pockets of the shareholders. If the defendants were able to prove their innocence no one would rejoice more than himself. He should be glad to see the honour of British merchants vindicated. He should be glad to see a transaction, which at present appeared in the blackest colours, freed from suspicion. He should be glad for the defendants’ own sake that they should be able to leave the court with honour. He and his learned friends when they had completed their task of laying the case clearly before the court would have performed their duty, but on the jury a solemn responsibility rested. The whole merchant world were looking for their verdict. It was possible that they might have been on intimate terms with the defendants, for aught he knew might have sat at their tables; but he trusted that they would nevertheless perform their duty. The great spirit of mercantile honour had for many years been declining in this country, but he trusted that their verdict would be such as would vindicate it, and one which would meet with the approbation of the whole country. It was very seldom that so grand an opportunity arose of vindicating public justice, and he trusted that they would be equal to the task.

At the conclusion of the learned counsel’s address the court adjourned till ten minutes past ten this morning.

The Daily News. Nr. 7373, 17. Dezember 1869. S. 2. THE OVEREND, GURNEY, AND CO. PROSECUTION.

Dec 17

The trial of the late directors of Overend, Gurney, and Co. (Limited) on the charge of conspiracy to defraud was again proceeded with yesterday in the Court of Queen’s Bench, Guildhall, before Lord Chief Justice Cockburn.

On the Lord Chief Justice taking his seat,

The Solicitor-General said he saw in the newspapers of that morning a letter written by Mr. Oswald Howell, one of the witnesses in the case, in which he said, “In my cross-examination this afternoon the Solicitor-General most unfairly cited a single paragraph from a report of mine, making it appear to bear a meaning wholly inconsistent with what went before. He made it appear that I had endeavoured to convey an impression to the readers of that report that the directors had sold their shares; he insisted that my having used the words, ‘held shares’ implied that they had held them. In my report I simply stated that Mr. Rennie and the others held shares at the date of the suspension.” Now he was in his lordship’s hands, and in the hands of the jury. He would say nothing about his own character, but he asserted that he in no way misrepresented Mr. Howell, and that he did not in the least desire to convey an impression other than the correct one.

The Lord Chief Justice—The letter is a gross contempt of court.

The Solicitor-General—That is a matter for your lordship; but your lordship will pardon me for calling attention to the publication of this letter, to which I give this public denial.

The Lord Chief Justice—It is a scandal. Is Mr. Howell here?

Mr. Howell (who was sitting among the junior counsel)—I am here.

The Lord Chief Justice—You have been guilty of a gross outrage of all propriety, and of a gross contempt of court. I do not for a moment say that a witness, if he thinks he is treated unfairly and unhandsomely, has not a right to appeal at a subsequent period to public opinion for his vindication, but if he does this pending the proceedings it is a gross contempt of court, and unless you apologise to myself, as the presiding judge, and the Solicitor-General, for the way in which you have acted, I shall commit you.

Mr. Howell—I am exceedingly sorry that I wrote the letter. At the same time I think that two previous passages in my report certainly convey no impression whatever that the directors had sold their shares. I showed the contrary clearly; and last night, when I read over the whole pamphlet to several gentlemen, they said if the whole of it had been laid before the jury, that no gentleman on the jury would suppose that I intended to convey any impression but that they had withdrawn their deposits with the limited company before the collapse.

The Lord Chief Justice—It is quite possible that that may be the proper construction. It may be that you may have thought yourself perfectly justified in clearing yourself from any imputation that was cast upon you; but what I am pointing out to you is, that a witness on whom observations are made may at a future time take an opportunity of clearing himself from imputations cast upon him, but it is highly improper to do so while a trial is going on; and I am astonished that a gentleman who professes to know something of public business should have taken such a course; and I am not quite sure that I ought not to visit your conduct with much more severity than with a mere reproof.

Mr. Robert Slater was then called. He stated that he is a member of Lloyds’, and has office in Cornhill. A few weeks before Overend, Gurney, and Co. (Limited) was formed, Mr. Gordon, one of the defendants, spoke to him, and spoke to him again a day or two before the company was formed. He mentioned to him that his services might be required in the bringing out of a new company in the way in which he had been previously occupied. Had previously been employed by a company with which Mr. Gordon was connected. The name of the company was not mentioned. Next saw Mr. Gordon on this matter on the 12th July, at the offices of the solicitors in Mildred-court. He hardly saw Mr. Gordon, who was engaged with the other gentlemen, but as he passed out he told him that his services would be required to take charge of the share business of Overend, Gurney and Co. (Limited). The next day he attended at the offices of the company, 51, Lombard-street. First saw the prospectus on the 13th, and on that day first knew the names of the directors. Did not receive any instructions that day about the business. Remembered an application being made from the Stock Exchange about a settlement, asking for certain documents. On the 8th of August, 1865, the directors held a meeting, and on reference to the minutes he found that it was resolved that the first five resolutions should be entered in a separate minute book; that a letter having been read from the secretary to the Stock Exchange Committee asking for the documents required by the Stock Exchange Committee for the purposes of a settlement, it was resolved that the secretary be requested to furnish the requisite information. In accordance with that resolution he applied to Mr. Jones, the solicitor, for his assistance to furnish him with such documents as the Stock Exchange might require. Did not remember whether he applied to him in writing or personally, but he believed personally. Believed he got the letter from Mr. Slaughter before the 8th of August. In consequence of his application to the solicitors he received from them the certificate of incorporation and a deed. The other documents that he forwarded to Mr. Slaughter were in his possession before. Could not identify the deed. He saw the indorsement. The same deed that he received from the solicitors he took to the Stock Exchange. With that deed  he sent a letter. It was a parchment deed that he sent. Did not then know of the existence of any other deed. Another meeting of the board was held on the 27th July. (The minutes were read stating that Messrs. Wilson, Bristow, and Carpmael, who had been requested by Mr. Gordon to peruse the deeds on behalf of the purchasers, had settled them with the assistance of counsel on both sides, and that they had been executed by the members of the old firm, and it was resolved that the seal of the company should be attached to them.) The allotment of shares was completed on the 28th of July. Mr. Boys was the permanent secretary of the company. Was not aware that the old company had any secretary. Mr. Boys had the management of their continental business. Mr. Bois and witness acted at the same time as secretaries; not together, but separately, each attending to his own class of business. Remembered on various occasions being requested to withdraw from the board-room. That might have happened half a dozen or a dozen times. On some occasions Mr. Boys was requested to supply his place, and sometimes he left the directors alone. He had simply the share business to attend to.

The Lord Chief Justice—When your business was done, the chairman said “You can withdraw,” and Mr. Boys came?—Yes.

When the business of your department was done, you were requested to withdraw?—Yes.

The witness proceeded to say that he saw the seal of the company affixed to the deeds. Was always under the impression that there were three deeds, but he might have been mistaken in that. No. 51, Lombard-street was a different office from 65, Lombard-street, where the money business was carried on. Never to his knowledge saw the deed of covenants, what he might call No. 1 deed, at No. 65, Lombard-street. Had often seen deeds on Mr. Boys’ table. The directors commenced the allotment on the 24th July. The whole of the shares, 83,334, were allotted to the public or to the new directors. Mr. H. F. Barclay had 1,000 shares, Mr. Gibb 1,000, Mr. Gordon 200, Mr. Rennie 40l. There was a memorandum to his name that Messrs. Cavan, Lubbock, and Co., the firm of which he was a member, had 200 of these shares. Mr. Rennie had 200. The members of the old firm took under the agreement 16,666 shares amongst themselves and their former partners. Could not tell whether the numbers were modified without having a copy the register.

The Solicitor-General admitted that 8,300 shares were sold from time to time, adding that they realised 172,633l. 9s. 10d., which amount was carried to the credit of the suspense and guarantee account.

Examination continued—He ceased to be secretary in February, 1866. The last minute in his handwriting was of that date.

Cross-examined by Sir J. Karslake—His business was to take charge of the share list, and that continued the case to the last. The books which he kept had reference entirely to that matter. The temporary office for the registration of shares was No. 51, Lombard-street, the general office of the company being No. 65. The directors met for the allotment of shares at both places. When he ceased to act as secretary the 15l. per share had been paid, and when he took office it was understood that his services would be dispensed with as soon as that had been done. Had been previously engaged in a similar capacity in other companies. The allotment and registration of shares was part of his ordinary business. The total number of applications for shares was, according to his return to Mr. Slaughter, of the Stock Exchange, 224,484, of which 365 were withdrawn. Only 83,000 odd could be allotted, and 16,000 odd were retained by the directors. His attendance on the directors related exclusively to the allotment of shares, and his time was very much occupied with that. Received the deed from Mr. Jones’s firm.

Cross-examined by Mr. Mellish—Did not see Mr. Barclay at the office before the 8th of August. Heard that he accompanied the expedition for the laying of the Atlantic cable. Was present when the two deeds were executed. The resolution for affixing the seal was passed on the 27th July, when Mr. Barclay was absent from England, and the seal had not then been prepared. Mr. Barclay did not read the deed, but signed it after being told that the names of two directors were necessary.

Cross-examined by Mr. Giffard—A wish was expressed by the other directors to Mr. Rennie that he would waive his right to 99 shares, and he consented to do so. Almost all the directors were in a similar position.

By the Lord Chief Justice—Was not aware that Mr. Barclay instantly gave way. Pressure was put on one or two directors at the same time, to give up their right.

Re-examined by Dr. Kenealy—At the time when the directors gave up their rights the shares were at a premium. Mr. Barclay came back to England just before the meeting of the directors on the 8th of August. He (witness) never had a copy of the deed at No. 51. That was not in his department.

The Lord Chief Justice (to witness)—I want to call your attention to the resolution of the directors, that the secretary should furnish to the secretary of the Stock Exchange all particulars that might be required, and obtain Mr. Jones’s assistance for that purpose. Was that the only instruction you received?—The only instruction.

Were you told specifically what deeds or documents you were to send to the Stock Exchange?—No, I was not.

Were you told what deeds or documents you were to apply to the solicitors for?—I was told to get such things as the Stock Exchange required.

Then, as you received a statement from the Stock Exchange of their requirements, so you were instructed by the Board, whose officer you were, to get the necessary documents and other things to satisfy the requirements of the Stock Exchange?—I was.

The witness then withdrew.

Dr. Kenealy said his lordship would remember what had taken place during the trial with regard to the affidavits and answers connected with the proceedings in Chancery. He had since read them, and was perfectly ready to put them in, on the understanding that he would be allowed to comment upon them.

The Lord Chief Justice—You have no objection to their production?

Dr. Kenealy—No, my lord, I am willing to make them part of my own case.

The Solicitor-General said he could not enter into any bargain on the subject.

The Lord Chief Justice thought it would be a pity to interrupt the course of the evidence at that moment.

Dr. Kenealy said he had thought it desirable to inform his lordship of his feeling on the subject as early as possible. He would do what he had stated at whatever time might be deemed most convenient.

Mr. Harding, the official liquidator, examined by Dr. Kenealy—Besides being the official liquidator of the new company he had acted as inspector of the old firm under a deed executed by its members. The amount of cash received on the 83,000 odd shares up to that moment was in round figures 3,277,000l. The liabilities of the limited company on the day of suspension amounted to 18,727,915l. 13s. 8d.

The Lord Chief Justice (to Dr. Kenealy)—What is it that you wish to know?

Dr. Kenealy—I wish to know, my lord, the value of the assets. (To witness)—Taking the balance between the assets and the liabilities, what did they owe at that time?

The Lord Chief Justice—He does not know up to this time what the assets will amount to.

By the Lord Chief Justice—I include in the liabilities all the bills that have been rediscounted.

Dr. Kenealy said the pith of his question was, taking the assets and the liabilities, what was the balance?

The witness—On the 31st of October last the deficiency was 3,066,000l.

Dr. Kenealy—I want to know what was the difference between the assets and the liabilities at the time of the suspension.

The Lord Chief Justice—I don’t think you can have that. It may be very material as regards the financial position of the company, but we have to consider how much of the 18 or 19 millions was got rid of through bills being paid by the parties who were liable.

The witness said he asked Dr. Kenealy on the previous day to tell him what was the nature of the information he would ask for, and he understood him that he would not question him as to anything which was not included in the depositions in the Court of Chancery.

After some further discussion on the point,

Dr. Kenealy, addressing the witness, said—I want to know what was the exact position of the company when they stopped. They owed 18,000,000l.; what were the probable assets?—That depends upon what they have turned out.

Dr. Kenealy—That is not an answer to my question.

The Lord Chief Justice—Can it be answered?

Dr. Kenealy—We know what were the liabilities; I ask what were the probable assets at the time when they stopped?

The Lord Chief Justice—They can only be probable.

The witness here referred to an approximate estimate which he formed in June, 1866, and submitted to the shareholders, with a statement that it could only be approximate.

Dr. Kenealy (to witness)—I ask you as an accountant what was the approximate or probable value of the assets at that time. Nothing can be more simple than that question.

The Lord Chief Justice—Nothing can be more simple than the question, but nothing more difficult than to answer it. If the witness had to append to his report of that time the statement he has mentioned, he can only speak from experience now.

Dr. Kenealy (to witness)—Do you mean to say that at that time you could form no estimate as to the probable value of the assets?—The figures are stated here but they are not cast up.

The Lord Chief Justice—I must say that I think Mr. Harding is doing exactly what is right. He has told you what was the calculation made at the time.

The Solicitor-General observed that the witness said in his report in June, 1866, that no estimate could be made of the claims which would arise against the company in respect of bills re-discounted.

The witness said he could give the result of the estimate which was formed at the time. The assets were estimated as follows:—Cash in hand, 63,621l. 3s. 4d.; bills receivable in hand, 1,149,762l., estimated to realise 1,100,000l.; sundry debtors’ balances, 461,696l. 2s. 5d., estimated to realise 422,000l.; overdue bills in hand, 98,533l. estimated to realise 89,000l.; Overend and Gurney suspense and guarantee account. 2,970,168l.; estimated to realise 2,250,000l.; estimate of furniture, &c., 27,000l.; surplus of security held by creditors, 266,827l.; sundries, 1,214l. The total was 4,220,494l. 10s. 3d. The whole of the liabilities amounted to 18,000,000l. odd. This included contingent liabilities to the amount of 14,000,000l. That was the amount of the bills then current.

Then the assets were 5,000,000l., and the liabilities 14,000,000l.?

Witness—No, the whole of the 14,000,000l. might have been paid by the other parties liable on the bills. It was not all paid. It was impossible to make an estimate of the value of the assets at the time of the stoppage. The advances made by the limited company in respect of the debts of the old firm were 1,175,052l. 13s. 10d. which was debited to the suspense and guarantee account, and there was received by the limited company from the proceeds of the estates of the members of the old firm 529,044l. 4s., and a further sum of 529,015l. 9s. in respect of the excepted accounts. The balance due on the suspense and guarantee account at the time of the stoppage was 2,970,168l. 17s. 10d. On the 31st October last the balance was 2,168,054l. 3s. 7d. There was a book containing a list of guarantees by the old firm. These were not a portion of the liabilities transferred to the new firm. They were contingent liabilities. They were not taken over by the limited company. Many of the guarantees had never become claims, and where the limited company made any advance to enable the old firm to meet claims of this nature the amounts were debited to the suspense and guarantee account. He could not state how much was so paid. The balance-sheets of the old firm which were produced yesterday were schedules containing the balances which appeared in the ledgers. They did not give information as to the actual profit and loss. They were abstracts from certain books. The profit and loss account was kept in another ledger—the private ledger. The private ledger contained the only statements actual profit and loss.

Dr. Kenealy—Looking at that balance-sheet, is there anything which would give anybody any knowledge of the state of the old firm?

Witness—Not on taking up this statement. A stranger looking at this would see a series of items before him, but could come to no conclusion. These are the balances owing to the firm and the balances owing by the firm.

Dr. Kenealy—Do they give you the exact position of the firm?—Not as to the value of the assets.

The Lord Chief Justice—If this is the way in which they carried on their accounts during the time of their prosperity I do not see how the manner of keeping the accounts can be imported into this case as an accusation. What about the private ledger?

Witness—The profit and loss account does not appear in these schedules, but in the private ledger. The private ledger, which he held in his hand, showed that the balance of profit in the half-year ending in July, 1865, was 6,406l., which was carried to the reserve account. The same book showed that in 1864 there was a loss of 348,670l. 16s. 2d., which was also carried to the reserve fund. In 1863 there was a profit of 30,586l. 4s. 8d.; in 1862 a profit of 37,834l.; in 1861 a profit of 229,101l. 12s. 3d.; and in 1860 a profit of 430,345l. 14s. 8d., subject to reduction of 86,000l. for rebate of bills.

In reply to a juryman, the witness said that up to a certain date, 1860, the profit and loss account appeared to have been entered as “interests and commissions.”

By the Lord Chief Justice—Up to 1860 the interests and commissions were carried to the profit and loss account; after that date they appeared to have been carried to an account which showed the position of the firm. The result would be the same. The accounts would equally show the real state of things.

Dr. Kenealy (having handed the private ledger to the witness) asked him what loss that showed in 1862, to which he replied 37,834l. In 1861 (the witness added) there was a balance of profit of 22,910l. 12s. 3d. In 1860 the total profit returned was 430,345l. 14s. 8d., subject to a reduction of 86,000l. for rebate on bills.

Would not anybody reading the books suppose that, on the whole, the firm had been carrying on a very profitable business?—In 1865 the profits came down to 6,000l.

Dr. Kenealy—What was the preceding July, 1865?

The Lord Chief Justice—In 1864 there seems to have been a serious loss, and 1865 the profit was as low as 6,000l.

The Solicitor-General observed that after 1861 the partners did not divide any profit, all the profit that was made being carried to the reserve fund. The books showed a large amount of legitimate profit, but it was dealt with in that way.

The Witness—The books show a large amount under the head of interest.

The Lord Chief Justice—Is that interest realised, or is it interest on what might ultimately cause a loss to the concern?

The Witness—it is all entered as interest.

The Lord Chief Justice—But the question is whether it was interest paid, or interest in expectation.

The Witness—There is no entry in this book, my lord, that would enable me to distinguish. The total amount of interest received in 1863 was 549,000l.

Examination continued—Could not tell whether that represented interest received, or interest that might be received. According to the amounts entered there was an average annual rate of profit for some years before July, 1865.

Can you divide that by five and tell me what is the average?

The Lord Chief Justice thought that could not be done, adding that in one year there was a large loss stated.

The Witness—In 1864 the total amount of interest was 650,000l.

Dr. Kenealy—Then why is only 37,000l. entered as profit?—Certain accounts had not been passed.

The Lord Chief Justice—What we really want to know is what in each of those years, no matter whether it appears in one account or in another, was the real state of the firm, what they had realised either in the shape of profit or of loss. The witness does not appear to know that.

Dr. Kenealy (to witness)—What was the average?

The Lord Chief Justice thought that question was not material. In one year there was a great loss, and that would affect the question of average.

Dr. Kenealy then examined the witness at some length, for the purpose of eliciting explanations with regard to the absence of several leaves or numbers from “the guarantee book,” a book containing copies of letters relating to guarantees entered into by the old company. The witness was understood to say that, notwithstanding the omissions, he believed the record to be perfect. The learned judge examined the book himself, for the purpose of satisfying himself on the point.

By Dr. Kenealy—The date of the transfer to the suspense account of the money paid by the new company for the goodwill was the 31st of July. At the time of the suspension there was nothing standing to the account of Mr. J. H. Gurney in the single deposit book. There was 69l. standing to the credit of Mr. H. E. Gurney.

The witness was then examined as the securities held by the old firm in respect of the excepted accounts. With reference to that of Kelson, Tritton and Co., he stated that he was employed to liquidate their accounts. They were indebted to Overend, Gurney and Co. to the amount of 291,000l. He communicated with Messrs. Overend and Gurney, and asked what securities they had. They gave him a list, which included several bills of lading. He saw Mr. Birkbeck and Mr. J. E. Gurney a second time in reference to this matter, and told them that some of the bills of lading they held were of no value, inasmuch as the goods had been obtained on duplicate bills. He did not think they knew the position their securities were in at that time. Mr. Brikbeck was very angry, and used very strong language. Could not remember exactly what he said, but he seemed very much surprised. He asked witness to ascertain to what extent bills of lading had been used. He made inquiries, and reported to them the extent. Could not at this moment say what it was, but would endeavour to do so to-morrow. He was asked to assist in the realisation of such of the bills of lading as were of value, and did so. Could not say what became of the others. Did not think he had seen them since. Was not sure. They were not handed over to the new company. The liquidation of Kelson, Tritton, and Co.’s affairs continued long after the formation of the limited company.

Dr. Kenealy—These duplicate bills of lading held by them were of no use. I suppose?

The Lord Chief Justice—Yes. True, Kelson and Tritton had made an improper use of the duplicates, buy obtaining the goods by means of them, but as against their estate those in the hands of Overend and Gurney were good.

Dr. Kenealy—When was this?

Witness—In May, 1865.

Did Overend, Gurney, and Co., advance them money after that?—They had stopped payment then. Mr. Kelson was now following some occupation, but he did not know what it was.

Cross-examined by the Solicitor-General—Did not Mr. Birkbeck say he would have these men up at the Mansion-house? Did he not say that he would have nothing to do with another Davidson and Gordon business?—I cannot say; he was very angry.

Did he not subsequently tell you that Mr. John Henry Gurney had taken the opinion of counsel, and that he would not success if he prosecuted them?—I think he did.

Is there any pretence for the insinuation that counsel are instructed to make that after the discovery of these frauds Overend, Gurney, and Co. continued to transact business with these parties?—Not the slightest.

Were the books of the old firm properly kept?—As far as I am aware they were kept with perfect accuracy.

Every information concerning the business is to be got from them?—Yes.

There is nothing from which any one could draw the conclusion that there was an attempt at concealment?—Nothing.

Did they afford you the fullest information upon say matters on which you sought it?—Yes.

Did they assist you in every way in the realisation of their estates that had to be realised to pay debts?—We had all the assistance that we desired.

From the acquaintance with the business, which you have derived from the books, do you think that so far as money-dealing and bill-broking are concerned, it was a very large and lucrative business?—It was a very large business; and upon an average of years it had, in my opinion, been a lucrative one.

Was from 180,000l. to 190,000l. a year a low estimate of the profits of that business?

Dr. Kenealy—I put a question, my lord, as to what was the average profit.

The Solicitor-General (to witness)—Can you tell me from the books what was the turn-over of the money-dealing and bill-broking business in the year?—I think I can. In a going concern like that there were large sums of money paid out. If you mean the turn-over of money I can give it.

The Lord Chief Justice said he supposed that was meant was the actual money used in the course of business—the amount of the transactions?

The Solicitor-General—Yes.

Cross-examination continued—The total amount from 1859 to 1866 was 1,115,876,000l. In the year 1859 the amount turned over was 156,289,774l.; in 1860, 171,099,460l.; in 1861, 138,532,648l.; in 1862, 157,119,856l.; in 1863, 177,262,961l.; in 1864, 198,280,718l.; and up to the 31st July, 1865, 117,300,852l. The turn-over from the 1st of August, 1865, and the 10th May, 1866 (during the existence of the  limited company), was 166,155,164l. I should not think a profit of from 180,000l. to 190,000l. an excessive estimate for this turn-over. I have seen figures equal to that, if not much more. The value of the bills discounted from 1859 to 1868 was:—In 1859, 62,106,700l.; in 1860. 62,009,000l.; in 1861, 53,645,000l.; in 1862, 64,314,000l.; in 1863, 66,317,000l.; in 1864, 74,984,000l.; in 1865, up to the 31st July, 41,388,000l.; and from the 1st August, 1865, to the 10th of May, 1866, 56,829,000l.

Did you find in inspecting the books that the legitimate business, that is the money-dealing and bill-broking business, of the new company remained, practically speaking, the same as it was under the old company?—There was a large amount of very good paper.

Are you able to state whether if the money-dealing and bill-broking business had been alone continued and could have been separated from what have been called the excepted accounts, the business would have been a sound and lucrative one?

Witness—You mean in a series of years?

The Solicitor-General—Yes.

Witness—I cannot form an opinion as to the nine months, because it was an exceptional period.

The Solicitor-General—In what way?

Witness—Money rose in value between the formation of the new company and the date of suspension from 31/2 to 7 or 8 per cent., and bills which had to be rediscounted must have been rediscounted at a higher rate.

The Lord Chief Justice—That would possibly involve a loss?

Witness—Yes; bills taken one day at 5 per cent. may have been rediscounted at 6 or 7.

The Solicitor-General (to witness)—Of course, a large quantity of such an immense business as that must be done by rediscounting?—Yes. On the 10th of May, 1866, the Bank rate of discount was 8 per cent.; on the 27th of July, 1865, it was 31/2.

I suppose that with such a high rate of interest there would always be a withdrawal of deposits?—Yes; to a certain extent.

The witness then gave the dates of the successive additions to the Bank rate of interest between July, 1865, and the 10th of May, 1866.

The Solicitor-General—Then the result was, that so far as rediscounting operations were concerned this new company was brought out at a most unfavourable time?—That is my opinion.

Cross-examination continued—Some of the partners sold part of their private property for the purpose of backing up the suspense account. There was an entry of 150,000l. carried to that account on the 19th of August. On the 16th of September 35,000l. more was added to it, the letters “H. E. G.” being affixed. A very large amount of property had been sold since for the benefit of the creditors. In the first four months of 1866 deposits were withdrawn from the bank at the rate of about 1,000,000l. a month. A great deal more money went out than came in. Between the 1st of August, 1865, and the date of the suspension the company was worse in that respect by nearly 5,000,000l. Between January 27, 1866, and the 10th of the following May there was a diminution of nearly 4,000,000l. There were at that period rumours in commercial circles in London that some of the private property of Messrs. Gurney had been sold, or was being sold.

Was the money which was withdrawn so much cash lost for the purpose of the bank?—Yes.

The Lord Chief Justice—The great bulk of such a business must, I presume, be done with other people’s money, the difference between what they make by it and what they pay for it being the profit. Can you tell me what amount the private property of Messrs. Gurney has realised since the stoppage?—The cash received from the several estates up to the 31st of October amounted to 718,000l.

Were the estates sold under circumstances of great depression?—During the period when they were sold there was very great depression.

Cross-examination continued—The stoppage of the house of Overend and Gurney affected the value of all securities. The private estates had not yet all been sold. It was estimated that what remained would produce sixty or seventy thousand pounds. John Henry Gurney paid 380,000l. out of his property before the stoppage. The house in Lombard-street fetched 27,500l., less expenses. If the period had not been one of depression it would have realised considerably more. The excepted accounts, which were put down roughly at 4,000,000l., and were afterwards valued at 1,000,000l., had realised 530,000l., and were expected to produce about 150,000l. more. The securities sold were all realised at an exceptional period, and he did not think 1,000,000l. was an excessive value to put upon them at the time.

The Solicitor-General—Looking at the business of the company, do you think that 500,000l. was a fair value to give for the goodwill?

Witness—In answer to that I must have regard to the valuations made by the partners at the time of the transfer, valuations of their estates, and also to the amount of money which their credit enabled them to obtain on deposit. The excepted accounts are four millions. They were estimated to produce a little more than a million, and I should have looked to see what there to produce the remaining 2,900,000l.

The Lord Chief Justice—You say that, looking at the state of things, to what they were liable for, and looking, on the other hand, to what they had in the shape of money or securities, they were not in a solvent state, unless you could consider as part of the assets the amount which would be realised by the excepted accounts?—Yes; they would still be 900,000l. short.

Dr. Kenealy—1,900,000l.

The Lord Chief Justice—Then against that there would be the private estates of the different partners?

Witness—Yes.

The Lord Chief Justice—Then there is another item not taken into account, and that is the very large sum paid in on private deposit afterwards.

The Solicitor-General—Yes, over a million.

The Lord Chief Justice—Then it stands thus. In the first place, the excepted accounts amount to four millions: that is reduced to three by the private accounts of the partners; the intrinsic worth of the accounts is another million, and that brings it down to two millions; then there is 500,000l. for the good-will; and then, as against the difference, there is the private estate of the partners?

Witness—Yes.

The Solicitor-General—And the question is whether the private estates of the partners were not worth at the time much more.

Witness—According to the estimates, that would be so.

The Court then adjourned, at 10 minutes to 5 o’clock, till a quarter-past ten this morning.

The Daily News. Nr. 7374, 18. Dezember 1869. S. 2. THE OVEREND, GURNEY, AND CO. PROSECUTION.

Dec 18

This trial was continued yesterday, the Lord Chief Justice taking his seat at 20 minutes past 10.

Mr. Harding’s (the liquidator’s) cross-examination by the Solicitor-General was resumed.

The Solicitor-General—In the case of Kelson, Tritton, and Co. it was suggested, Mr. Harding, by my learned friend (Dr. Kenealy) that the bills of lading were handed over to the new company as assets. Is there any foundation for that?—So far as I know, there is not.

In reply to the Lord Chief Justice, the witness said he had inquired since yesterday of Mr. Boys, who had been his principal assistant in his investigations, whether the bills of lading were in existence, and he (witness) believed they could be found.

The Solicitor-General—Do you know that Mr. Head had 1,000 shares in the company?—He is on the list of contributories for 1,000 shares.

In reply to the Lord Chief Justice, the witness said Mr. Head was a brother-in-law of Mr. Henry Edmund Gurney.

Examination continued—Mr. Head had paid his calls. Had no reason for supposing that the shares were not Mr. Head’s. Since last night he had drawn out a statement of the estimated value of the different assets which were handed over to the new company at the time of the transfer.

Was there at that time 780,000l. standing to the credit of Overend, Gurney, and Co., in the Norwich bank?—It appears so from the books.

Was 196,000l. of that transferred in July to the old bank?—Yes.

The Solicitor-General (in reply to the Lord Chief Justice) observed that the partners in the Norwich Bank were the owners to the extent of one-fourth of the bank of Overend, Gurney, and Co.

The witness, referring to a paper which he held in his hand, said it was rough estimate which had come into his possession as liquidator, of the value of various properties belonging to the partners in Overend, Gurney, and Co.”

Is the value of the land estimated there at 556,000l.?—Yes.

Have you yourself arrived, independently of that paper, at a judgment of the value of the property there referred to?—Yes.

The Lord Chief Justice (to witness)—My mind was very much struck with the statement made by Mr. Rennie before the Lord Mayor. That appears to me a statement of great importance in reference to this cause. Have you been requested by those who conduct the prosecution to ascertain how far that statement was correct? No, my lord. I offered to furnish any information I could both to Mr. Lewis, when he had the conduct of the proceedings, and to others.

The Lord Chief Justice—Somebody ought to have inquired, for if that statement be correct Mr. Rennie is intitled to an immediate acquittal.

By the Solicitor-General—The estimate to which he had referred did not seem to him an exaggerated one. The next item was sundries 613,000l. He had realised some of them, and knew of the existence of others.

Does 613,000l. seem to you a fair or an unfair estimate of the value of those sundries?—If I had made an estimate at the time I should no doubt have taken some of those assets at that or a higher value.

Examination continued—The estimate was fairly made. Some reservation had been sold for 100,000l.; they were put down at rather less. There was contingent reversion of 20,000l. a year which had not been realised; when that fell in it would produce a large amount. More than 97,000l. had been actually realized for the life interests, and the contingent life interests would realize a large amount. Only part of the reservations had been sold. There were special circumstances which affected their value after the suspension. The health of Mr. John Henry Gurney had broken down. The Norwich Bank was an asset belonging to Overend, Gurney, and Co.; and at the time of the suspension it was in great credit, and doing a large business. Had had some means of knowing the value of that bank, and estimated the net profit at between seventy and eighty thousand a year. From information which he had gained he thought 300,000l. was below what country bankers would put down as the value of the goodwill. Some well known bankers valued such a business at five years’ purchase.

Then all those items brought out 2,248,281l. as the value of the property of the private partners at the time of the transfer, irrespective of the value of the excepted accounts, which formed the suspense account?—Yes.

By the Lord Chief Justice—The goodwill of the Norwich Bank was sold in 1866.

The Solicitor-General observed that it was sold under an arrangement that the price to be paid was to depend on the profit realised up to March, 1870, and hence the goodwill did not yet appear as an asset.

Dr. Kenealy said he doubted whether he should make that valuation part of his case.

The Solicitor-General said what he wished to show was that the items of the valuation were not excessive.

The Lord Chief Justice observed that, according to Mr. Howell, the total of the suspense account was 4,051,000l., whereas, according to Mr. Harding, it was 4,213,000l.

The Solicitor-General observed that Mr. Howell omitted some of the accounts, and that was the cause of the difference.

The Solicitor-General (to witness)—Taking the excepted accounts at the nominal amount of 4,213,000l., and their estimated value at 1,080,000l., leaving 3,133,000l., did the private property of the partners make up a surplus of 170,000l.?—An apparent surplus of that amount.

Why do you call the surplus an “apparent surplus?”—It is the difference which appears between the totals. Events have effected the items on realisation.

Turn to the private ledger profit and loss account. In your account of that have you excluded the interest account?—Yes, because the interest was interest was in two books.

Was the profit and loss balance in 1861 from commission, &c., 22,910l. 13s. 3d.?—Those are the figures.

What is the balance of the interest—is it not 238,179l. 12s. 11d.?—Yes.

His Lordship—That is less rebate?—That is so.

The Solicitor-General—That brings out 261,675l. profit for the year 1861.

Witness—That is the balance of the interest and profit and loss account; there was no sum written off for losses of any consequence.

The balance of commissions in the next year was 37,874l., less the balance brought from 1861. Was the balance written off?—It has been brought forward each year. It does not stand by itself in the books.

The balance of interest was 112,516l. less rebate? –Yes.

In 1863 the balance of commission was 30,586l. 4s. 8d.—Yes.

And the balance from 1862 brought forward 37,586l.?—Yes. Then several sums were written off for bad debts.

That reduced the 30,586l. to 12,952l.?—That amount was the produce of the commission account. The balance of interest was 549,556l., less interest in suspense 405,000l. They did not divide the profits, but carried the interest to the reserve account. They were allowed to accumulate from year to year, and in 1864 484,000l. was written off. What I have endeavoured to give is the amount of the earnings of interest on commission, without making deductions in respect of bad debts.

By the Solicitor-General—The profit earned in 1864 was 79,285l. That was the amount earned in that year in business and commissions. 601,000l. was the amount realised for interest and commission in 1861, 1862, 1863, 1864; and the amount which appeared to be written off against that amount for bad debts was 484,315l.

The witness was then examined as to the excepted accounts. The first he was questioned upon was the Atlantic Royal Mail Steam Packet Company, the debt of which stood at the time of the suspension at 83,345l. He said there were four steam vessels taken over from the company, the cost of which was upwards of 700,000l.

Dr. Kenealy—Does that appear from the books of Overend, Gurney, and Co.?

Witness—No.

Dr. Kenealy—Then I object.

The Lord Chief Justice—You are entitled to object, but I am sorry the objection has been taken.

Dr. Kenealy then withdrew the objection.

Witness said he knew the fact from the circumstance of his partner being the liquidator of the Atlantic Steam Company. It also came before him on his preparing the balance-sheet of the Atlantic Royal Mail Company. He knew the amount was large, but could not remember whether it was 700,000l. or 750,000l. He sold them at a very small price, 90,000l., in consequence of the low condition of trade at the time, and the depreciation in the value of all steamships. These steamers were built for passage between Galway and America, to carry out the Galway contract. The East Indian and London Shipping Company’s debt stood at 406,264l. There were seven vessels given in security by the company, which were taken at the value of 175,000l. Certain parties took them over at 126,500l., but they were unable to carry out the contact, and he only received 98,000l. for them. That was at a time of great depression. The company also held some railway securities against some of the excepted accounts. These securities were depreciated more than any others, some being Irish railways. Some had been sold, but a great quantity were still retained, in the hope that the price would rise. These securities comprised shares and Lloyd’s Bonds of the following nominal value:—Portadown and Dungannon, 86,753l.; Kilkenny Junction, 56,700l.; Mid Wales, 53,650l.; Kilrush, 4,000l.; Belfast, Holywell, and Bangor, 122,000l. Those securities were in the account under the name of Mr. J. E. C. Koch, who managed the railway business of Overend, Gurney, and Co.

The Solicitor-General—Mr. Howell stated that on the 27th March Mr. R. Birkbeck withdrew 812l. Was there not a transfer of 47 shares to Mr. Edward Birkbeck, brother of Mr. Robert Birkbeck, on the date?—Yes, on the 29th March there is a transfer to him of 47 shares. The cost was 804l. and the broker’s commission would bring it up to about 812l.

Dr. Kenealy—Had you any connection with Overend and Gurney’s firm?

Witness—Not any, except having to go to them several times on the affairs of Kelson, Tritton, and Co., and the affairs of the East India Shipping Company. At the time of my appointment I did not know them by sight.

By Mr. Serjeant Ballantine—Mr. Barclay was the owner of 1,000 shares. 15l. per share was paid on them at the time of the suspension, and he has paid 25,000l. on them since.

By Mr. Giffard—Mr. Rennie held 201 shares. I was present at the examination before the Lord Mayor. Mr. Rennie made a long statement then. I have not verified the figures in that statement.

Dr. Kenealy—I believe you had various transactions with Overend, Gurney, and Co.?—Witness—Not many.

Dr. Kenealy—Have you received large sums of money from them?—Witness—I received one sum of 5,000l. in July, 1865.

The Lord Chief Justice—What was that for?—Witness—For my own services and expenses as liquidator of the East India and London Shipping Company, and for similar expenses and services of my partner, Mr. Whinnie, in the Atlantic Royal Mail Company. The contract entered into between Overend, Gurney, and Co. and the East India Shipping Company for the transfer of those ships was entered into with the sanction of the Vice-Chancellor, and it was stipulated that Overend, Gurney, and Co. should pay all the costs appertaining to the liquidation. In his opening speech Dr. Kenealy said he was compelled to call me, and that I had received a douceur of 5,000l., and as that may have left an unfavourable impression, I wish to make an explanation. He did not ask me any question about it in his examination in chief. Overend, Gurney, and Co. were the owners of nearly the whole of the shares of the Atlantic Royal Mail Steam Pocket Company, and the only parties entitled to receive the moneys realised in the liquidation. In the month of July I was informed that Mr. Gurney wished to see me. I went there, and Mr. John Edmund Gurney told me the firm were desirous of knowing the expense of the liquidation of these two companies. I was not prepared for the inquiry, but I said I would endeavour to ascertain, but as the matters were not closed it would be difficult to make out an account for the whole period. I consulted my partners on the subject, and went back to see Mr. Gurney, and said to him that, inasmuch as these matters had not been productive of any benefit to them, and as we knew that anything they paid to us would be an addition to the loss they had sustained, we would rather they put their value on the services we had rendered. This was the first transaction we had had with the firm. Mr. Birkbeck said he would consult Mr. John Henry Gurney; that he believed everything had been done to make the best of the two estates, and that I was to go the following day. I went, and he told me they had conferred together, and had come to the conclusion that 5,000l. should be paid for the two matters, provided we did what was necessary to complete the winding up. I said I was prepared to accept whatever they considered the services were worth, and he said, “You had better consult Mr. Whinnie, I shall not pay you to-day.” I consulted my partners, and one of them was not willing to accept that sum, as he thought it would not compensate us, but when I went to the bank a day or two afterwards I said I should not alter the amount. Mr. Birkbeck said the firm would much rather that I was satisfied than dissatisfied, and would give more if I was not satisfied. I said I would accept that sum, and it was subsequently paid to us.

Dr. Kenealy—And you were appointed joint liquidator of the company the following year?

Witness –Yes.

Did the Messrs. Gurney support you in that appointment?—They did.

And by that appointment you and your company will receive a considerable sum of money?—I hope so.

More than 50,000l.?—No, I do not think that our firm will be benefited to the amount of more than 25,000l. or 26,000l. The committee of supervision have considered the question of our remuneration, and have come to a conclusion upon it to recommend to the Vice-Chancellor what our remuneration shall be.

And by that appointment you and your company will receive a considerable sum of money ?—I hope so.

Does that include the amount under the deed of inspection?—No charge is made, or contemplated to be made, in respect of the deed of inspection.

You have been in communication with the former attorney for the prosecution, and you made out the figures for Mr. Rennie. Did you tell him you had made out the figures for him?—No.

Dr. Kenealy (addressing the court)—Now with reference to Mr. Rennie’s figures I will make this offer. Your lordship is aware of the position in which I stand, that I was not instructed till last Friday. If Mr. Giffard will offer testimony as to the correctness of those figures I shall not exercise any right to reply on those figures. I will waive my right of reply in reference to them.

The Lord Chief Justice—I was so much struck with the statement that if the witness were not examined as to the details, I intended to take him myself, step by step, through the whole of Mr. Rennie’s statement.

Mr. Giffard—So far as I am concerned I should have wished that to be done.

The Lord Chief Justice—I fully expected that you would have taken this witness as far as you could through all these matters.

Mr. Giffard—My learned friend has taken him through all these matters except those which Mr. Turquand will speak to. This statement was made on the 27th January last, and I supposed that Dr. Kenealy would offer evidence to negative the figures in it. I apprehend it is not for me to prove them affirmatively.

Dr. Kenealy—I wish to do everything that is reasonable.

The Lord Chief Justice—There is one very important point in reference to Mr. Rennie, as distinguished from  the other defendants. Mr. Rennie says, “Before I entered on this negotiation at all, I desired to have information from the old members of the firm as to certain things, and that information determined me to become a member of the firm.” Now, that strikes me as most important with reference to Mr. Rennie’s position in this case, that it should be ascertained how far those statements are real genuine statements, or whether they are delusive, and if it can be shown they are correct, then, putting aside for the moment the case of the other defendants, the question arises whether Mr. Rennie has not quite as much to complain of as any other shareholder who was not a member of the old firm. But when Mr. Turquand comes, perhaps we shall have the matter inquired into.

Dr. Kenealy (to the witness)—Were the old firm solvent at the date of the transfer?

The Lord Chief Justice—He has stated that they were not. There was 4,213,000l. stated as assets, which was not available for realisation under that head. To that extent the company was insolvent. (To the witness)—That, I understand, to be the real position of things?—Yes, my lord.

The Lord Chief Justice—I understand you to say that, even taking into account so much of that item of 4,213,000l. as could be afterwards realised, there still remained a balance against the company, and that to that extent they were insolvent?—Yes, my lord, except so far as their private estates might supply the deficiency.

The Lord Chief Justice—Supposing the old firm, instead of transferring their interest to a new company, had stopped payment at the end of July, 1865, there would have been insolvency to the extent of whatever failed to be realised of that 4,000,000l., so far as the business was concerned?—Yes, so far as the joint estate was concerned.

Dr. Kenealy—If their interest in the Norwich Bank and all the assets of which we have heard so much had been dispose of, would they on the 31st of July have realised 10s. on the pound, or 1s. in the pound, or what?

The Lord Chief Justice—There was a deficiency of 3,000,000l., against which there was 2,000,000l. of private property, and therefore it could not be a question of a 1s. in the pound.

Dr. Kenealy (to witness)—Do you think they could have paid at that time 10s. in the pound?

The Lord Chief Justice—If all their estates had been realised.

Dr. Kenealy—We know that the shareholders have got nothing from that source.

The witness—There may possible be a return to them of four or five pounds a share, reducing the loss to about 2,600,000l.

Dr. Kenealy—Do you say, as an accountant, that they would have paid on the 31st of July as much as 10s. in the pound?—I think the dividend would have been larger than that.

What did they owe to depositors?—To depositors and other creditors they owed on the 31st of July 5,419,000l. They owed as much as 4,000,000l. to depositors alone.

The Lord Chief Justice—Where does that appear?—In a printed paper (referring to a paper in witness’s hand). If the old firm had stopped the secured creditors would not have proved; the unsecured creditors would have proved, and the amount due to them was 4,500,000l.

The witness was entering into details with regard to the deposit accounts, when

The Lord Chief Justice interrupted him by remarking that distinctions of that kind were not material, as whatever might be the form of their liabilities people were insolvent to the extent of what they owed beyond what they had the means of paying.

Dr. Kenealy (to witness)—Do you think there would have been more than 19s. in the pounds?

The Lord Chief Justice—It is not a matter of thought, but a matter of fact.

Dr. Kenealy—Do you say that they would have paid more than 10s. in the pound?—Yes, in my opinion.

Examination continued—Mr. Howell’s statement that there were bills under rediscount on the day of the transfer amounting to 7,077,000l. was correct. Of that amount 2,079,801l. was under discount at Gurney’s bank at Norwich. Of that amount 1,700,000l. was afterwards paid in cash, and 227,000l. was renewed. The apparent loss was 135,000l., but claims had been made against the different estates, and dividends would be received.

Dr. Kenealy—You stated yesterday that about 5,000,000l. was withdrawn between the date of the transfer and the day of suspension, and about 4,000,000l. in the last four months.

(The learned counsel here handed to witness the general ledger, and asked him to look at the entries relating to withdrawals during the periods he had mentioned.)

Examination continued—On the 31st of December, 1865, the amount under the head of single deposits was 2,614,907l.; on the 30th of April, 1866, it was 2,095,518l. On the 31st of December, the loans on security amounted to 7,017,146l.; on the 30th of April, 1866, to 6,413,372l. On the 31st of December, 1865, the balances of country bankers amounted to 5,551,428l.; on the 30th of April, 1866, to 5,199,433l. The sum total of the withdrawals between those two dates was 1,471,157l. Could not say from actual knowledge whether Overend, Gurney, and Co. ceased to discount from the 1st to the 10th of May.

Was it not within the last ten days that the remaining withdrawals took place?—I have not the figures here. There were large withdrawals in the last ten days.

The Lord Chief Justice (to witness)—Do you say that the sum just mentioned is the whole amount that was withdrawn?—During that particular period, my lord.

The Lord Chief Justice—How is it that you spoke of that yesterday as a million a month?—Dr. Kenealy is referring to the figures which are here, and yesterday I was referring to some statistics which were before me. I referred to a book containing weekly accounts of the business of the company.

The Lord Chief Justice—There seems to be some discrepancy. I supposed from your statement yesterday that something beyond the normal rate of withdrawal commenced early in the year, not that the mass took place in the last ten days.

Witness—The amounts for the period selected I did not look to. I looked at the whole period.

The Lord Chief Justice—The impression produced on my mind was, that when it became bruited about that the partners in the old firm were realising their private property a distrust arose in the minds of depositors which induced them to withdraw their money—that that begun early in January, and continued till the period of suspension. Am I now to understand that the mass of the deposits were withdrawn in the last ten days?—It appears so from the figures which Dr. Kenealy has placed before me.

The Lord Chief Justice (addressing Dr. Kenealy) said he thought it would have been much better if he had brought out that state of things in his examination in chief, so that counsel on the other side might have applied their minds to it in cross-examining, instead of reserving the force of such a battery for a subsequent day.

Dr. Kenealy observed that he had not time before to acquaint himself with the facts.

The Lord Chief Justice said the withdrawals formed one of the main points relied upon by Mr. Rennie.

Dr. Kenealy (to witness)—Have you any doubt of the correctness of the figures to which I have referred?—The figures seem to correct. I say that subject to my examination which I may make.

Did the withdrawals in the last ten days amount to 1,108,278l.?

The Solicitor-General said he had before him an abstract of all the books, taken week by week, relating to the withdrawals, and he was assured that a comparison would show it to be accurate. The statement which he was instructed to make the day before was, he was not told, perfectly correct.

Dr. Kenealy observed that if that abstract were correct, the general ledger to which the witness was referring must be incorrect.

Examination continued—On the 30th of April, 1866, the single deposits amounted to 2,095,518l.; on the 10th of May they amounted to 1,856,550l., showing a reduction of 238,963l. The total amount of the withdrawals in the last ten days was 1,108,278l., and the total between the 31st of December, 1865, and the suspension, 2,583,430l.

The Lord Chief Justice said, although no explanation had been afforded of the difference between the statement then made and that made on the previous day, he could not at present treat the book before referred to by Mr. Harding as a fictitious one.

Dr. Kenealy (to witness)—Was not the real cause of the stoppage of the new company the want of power to realise the suspense account?—That question I must answer from subsequent knowledge. From what I learnt subsequently I am of opinion that if they had been able to realise what has been termed the lock-up, there would not have been a suspension.

Dr. Kenealy—If they had not been allowed to be locked up for three years and five months?

The Lord Chief Justice—They were locked up for that time because it was impossible with such debts as those to realise at once. Here were insolvent companies being wound up, and the dividends could not be got from time to time. The real cause of the stoppage was the deficiency of assets required to supply the place of the money that was drawn out. (To witness)—If there had not been a run upon them, they might be going on now?

Witness—Yes, my lord.

The Lord Chief Justice—As I understand the matter, the greater portion of this business was carried on with other people’s money; and if those people distrust, they will take their money away; and if they do not distrust, they will leave it?—It is a question of confidence, my lord.

Examination continued—Did not know whether, from the 30th of April to the 10th of May, 1866, the new company ceased to discount any bills; but, if that were the case, it would cause a withdrawal of deposits. The witness said he could explain why the figures did not agree with the figures he gave yesterday. Dr Kenealy did not deal yesterday with the accounts in the general ledger, nor with the debts. He found that on the 13th January the total amount was 14,192,000l.; on the 10th May it was 9,440,000l., making a difference of 4,752,000l. It was not merely the single deposits that were to be taken into account, but a large number of accounts were to be taken into consideration.

Do you find the name of Mr. George Head amongst the contributories?—Yes, for 1,000 shares.

Look at the list, and see if there is any person who is connexion of the defendants who withdrew his deposit just before the stoppage.

The Solicitor-General objected to the question.

The Lord Chief Justice—When there is a run on bank everyday desires to snatch his own brand from the burning. Here you have a business transferred months before, and the question is whether that transfer was a fraud. I do not think the jury will attach any value to the fact of persons withdrawing their deposit when there is a run on the bank. If it had been near the time of the transfer, and if it were shown that they had deposited money in the bank for the purpose of inducing persons to take shares, that would have been a different thing.

Dr. Kenealy—I feel the force of your lordship’s observations, and will not press the question.

The Solicitor-General—It is said that the bank discounted no bills during the last ten days; just look at the book and see.

Witness—I find that on the 1st of May the amount of the bills discounted was 54,454l.; on the 2nd May, 118,377l.; on the 3rd, 125,153l.; on the 4th, 114,000l. Believed the amount altogether in the ten days was 1,100,000l.

Can you give us any information of the account of Mr. Thomas Howard, whose debt is 331,000l.; was that transferred as a good debt?

Witness—No. It is one of the excepted accounts.

He had been related from his liability, had not he, by a deed executed some time before?—There was a deed.

The Solicitor-General read a proviso in the deed to the effect that nothing contained in the deed should prevent Messrs. Overned, Gurney, and Co. dealing with the securities.

The Lord Chief Justice—Then they released him, but did not release his securities?

The witness said that the property assigned was a mill and some other property in Manchester. A portion had been sold, which realised 7,000l.

There is a debt of J. E. C. Koch, 243,069l. Is that a real debt?

Witness—From this document.

Dr. Kenealy—No; you must confine yourself to the books.

The Solicitor-General—I object entirely to the evidence being merely what the books show.

The Lord Chief Justice—If, in the course of the liquidation, facts have come to his knowledge, he can give evidence of them.

The Solicitor-General—If the question had been asked in that form I should not have objected. I am perfectly contented with the truth of the transaction.

The witness said the books showed it to be in the nature of debt. There were several balances to the debit of an account headed J. E. C. Koch.

Dr. Kenealy—I see an account headed Levant and Black Sea Steam Navigation Company; was there such a company?—There were parties trading under that title.

By Mr. Giffard—On Garaway’s estate (one of the excepted accounts, the debt being 190,977l.) 30,000l. has been received, and a small sum, about 300l., has yet to be received.

The Lord Chief Justice—I should like you to give me a paper showing the profit and loss of the old firm for ten years prior to 1864; and I will now ask you this further question. From all you have seen of the books and accounts of the old firm are you of opinion that if this sum of 4,213,000l. could have been got rid of altogether—I do not mean altogether, because there were certain items to be set against it—in the first place, what the partners had in the firm to their private account; in the second place, what their debts would realise; and, in the third place, what their estate would realise—are you of opinion that if that crisis had not occurred in May, 1866, that that business would still have been a prosperous business?

Witness—I am able to express an opinion on that point with the more confidence, that having last night anticipated to some extent the question your lordship has put to me, I made some extracts from the books. I find that the turn over in the year 1860 was 170,000,000l., the amount of bills discounted was 62,000,000l.; the amount of deposits was 11,800,000l.; the amount of profit divided was 216,000l.; and the amount carried to reserve was 127,000l. In 1859 the turn over was 156,000,000l., the bills discounted 63,000,000l., the amount held on deposit 14,000,000l., the profit divided was 360,000l., and the amount carried to reserve was 82,000l. In the preceding year, 1858, I have not ascertained the amount of the turnover, but the bills discounted amounted to 62,449l., the deposits were 13,600,000l., the profits divided 200,000l., and the amount carried to reserve 53,000l.

The Lord Chief Justice—What I want you to tell me is was there anything to lead you to think that if that business, when the new firm took to it, had been properly conducted as a bill-broking and money-dealing business, without any of its funds being applied to purposes foreign to the nature of such a business—was there anything to prevent that business being conducted as prosperously and as cheaply as it was before?

Witness—I think not. I have given the matter a great deal of consideration, and I am of opinion that if the old firm had not formed themselves into a company it might have been in existence at the present time.

The Lord Chief Justice—That is, perhaps, rather a speculative opinion, unless you have good grounds for it.

Witness—I do not think the position was worse at the time the transfer took place, by the figure, than it was in 1864.

Dr. Kenealy said he wished now to afford explanation as to why the prosecution was unable to call Mr. Edwards.

The Solicitor-General submitted that before his learned friends could give evidence on that point they must show that Mr. Edwards had been subpoenaed, and call upon him upon his subpoena.

The Lord Chief Justice did not think that was necessary.

Mr. Dresten, a medical gentleman, residing at Tunbridge Wells, was then called by Dr. Kenealy. He stated that, as the medical adviser of Mr. Edwards, he knew that he could not attend as a witness without danger to his life, having within the last ten days undergone a serious operation, from the effects of which he had not recovered.

The Lord Chief Justice—That is quite enough.

Mr. Henry Boys, a clerk in the office of the official liquidator, proved that the original draft of the prospectus of the limited company was in the handwriting of Mr. Gordon. He could not tell in whose handwriting was the following interlineations in pencil—“that the company would have the advantage of at once entering into a large and profitable business.” He also proved the handwriting of letters of Mr. Daniel Gurney to Mr. John Henry Gurney, and the signatures of the deed entered into between Mr. Barclay and the other directors on the 2nd of August.

Mr. Peek, being recalled, proved the handwriting of letters from Mr. Birkbeck to himself.

These documents were read by the associate.

The Lord Chief Justice (referring to a letter from Mr. Daniel Gurney to Mr. H. Gurney, relating among other things, to the marriage settlements of his daughters, said that, if he understood the effect of the deeds, whatever might have been Mr. Daniel Gurney’s feeling with respect to the family settlements not being postponed to the security given to the new company, they were nevertheless so postponed; that is, the effect of the deeds was to make the private property liable, notwithstanding his objection.

Robert Witting produced the deed of mutual covenant relating to the rearrangement of the partnership with the Norwich Bank.

Mr. Charles Edward Jones, solicitor to Overend, Gurney, and Co., produced part of the draft of the first deed of transfer prepared by Mr. Braithwaite, who, it was stated, in reply to Dr. Kenealy, was a brother of Mr. Braithwaite, of the firm of Foster and Braithwaite. Many of the sheets were missing, having, as the witness stated, been incorporated with other drafts; and the Lord Chief Justice remarked that it was worthy of notice that Mr. Fooks, the counsel employed after Mr. Braithwaite, had adopted scarcely any part of the original draft. The witness also produced two other deeds. These documents were all put in as part of the case for the prosecution.

The Lord Chief Justice (to Mr. Jones)—It was stated in the prospectus that the deed was lying at your office for inspection. Can you tell me what number of persons went, with the view of taking shares, to inspect that deed?—From 30 to 40.

We have had a resolution of the directors to the effect that the secretary for the share department was to apply to you for the different documents required to satisfy the Stock Exchange. Had you say instructions from, or had you any communications with, any of the directors as to what documents you should give or what documents you should withhold?—None whatever.

Direct or indirect?—Direct or indirect.

With any of them?—With any of them.

In giving Mr. Slaughter the documents which you did give him, did you act upon your own judgment entirely?—Purely.

Mr. Hutchings, solicitor, produced a deed of release between Overend and Gurney and Company and Thomas Howard.

Mr. W. Turquand was then examined—He stated that he is one of the joint liquidators of Overend, Gurney, and Co. (Limited), acting with Mr. Harding. Looking at the list of excepted accounts, he found an item, “Peto and Betts, Arad, 14,000l.” That referred to the cost of the survey for a railway in Turkey. The cost of the survey was 28,000l., and one-half was to be paid by Overend, Gurney, and Co. He believed they did not get the concession, and the 14,000l. was a dead loss. The survey was in or before 1863. Did not know when the concession was finally refused. The Greek and Oriental Steam Company was a company carried on by Mr. Stephanos Zenos. Overend and Gurney made advances to him, and the result was a loss of 144,144l. The ships were taken over from him in 1863, and Zenos, he believed, was released from any further liability. The ships were used afterwards in carrying on the trading of the Levant and Black Sea Steam Company. Could not explain how that amount appeared in the books, seeing there was a release. Believed there was a deed of release. Mr. Birkbeck told him so.

The Lord Chief Justice—Have you the deed?

Dr. Kenealy—No, my lord.

The Lord Chief Justice—But it is your business to produce it.

Dr. Kenealy—I may take what one of the defendants said.

The Lord Chief Justice—It may be a deed providing that the surplus should be paid to Mr. Zenos. You may create a prejudice against the defendants which is not well founded.

Witness—Mr. Birkbeck told me that Mr. Zenos had been released by the firm. The ships taken over from Zenos were subsequently sold. Believed the last ship was sold in 1865, and the result was a loss of 38,211l., charged to the Levant and Black Sea Steam Company. A portion of the fleet was sold on the 2nd July, 1864, for 67,000l., another portion—some barges—for 7,000l., and the ship Pacific, for 25,000l., appeared to have been sold on the 3rd November, 1861, but that must be a mistake. The Millwall Iron Works was another of the excepted accounts. The debt was 510,368l. at the time of the transfer, and 566,489l. at the time of the suspension. The equity of redemption was in the Norwich Bank. Did not know who made over to them the equity of redemption, but he presumed it was the old firm. On that 566,489l. nothing had been realised.

The Lord Chief Justice—Have no means been taken to get it in?

Witness—They hold it as security for the purchase bills. I am sorry to say the value of the works is not as great as the charge upon them. There was a mortgage for 150,000l., and beyond that there is a separate account still outstanding between the old Norwich Bank and Overend, Gurney, and Co.

Dr. Kenealy—It has realised nothing.

Witness—Realised nothing. On Mr. Thomas Howard’s account, 10,000l. had been received. The East India Shipping Company’s account had been increased from 406,264l. to 578,218l. There was a mortgage on the ships  for 150,000l., which was paid by the Limited Company before the suspension. That was the way in which the debt was increased.

Cross-examined by the Solicitor-General—Had seen as estimate putting a value on these excepted accounts. It appeared from that that there were some securities held against them. On the total there had been a heavy loss, but in one or two instances they fetched more than the amount. Agreed with Mr. Harding that the failure of Overend and Gurney themselves caused a depreciation in the value of the securities. Was aware of the failure of Pinto, Perez, and Co., and Wallis and Co. Their failure occurred just before the failure of Overend, Gurney, and Co. The effect of the failure of Pinto, Perez, and Co. was to throw back a larger quantity of paper on Overend, Gurney, and Co.

The Lord Chief Justice—I see that the debt of the Millwall Iron Works has increased from 510,000l. to 566,000l., how was that done?

Witness—That I cannot state at once; there are several items right and left, which would have to be gone into.

The Lord Chief Justice—It is important that that should be ascertained, because it may be objected that the new directors threw away the money of the shareholders in advancing more money to these concerns, in fact throwing good money after bad?

Witness—I could not answer the question now without going minutely into the items.

The Lord Chief Justice—Looking at the valuation of the excepted accounts are you of opinion that an exaggerated value was put on them?

Witness—I do not think so. I went over the matter carefully with Mr. Birkbeck, and I came to the conclusion that it was a fair and reasonable valuation to make.

That is your deliberate opinion?—Yes.

After going into the matter?—After going into the matter. I should state that on Mr. Lewis’s account up to the present time we have received 70,000l., and we expect a further amount of 80,000l.

What was the debt of the Atlantic and Royal Mail Steam Company and that of the East India and London Shipping Company estimated at?—The Atlantic Steam Company was put down at 280,000l., and the East India Shipping Company at 175,000l. There were seven ships in the case of the East India Shipping Company, and four in the case of the Atlantic. The tonnage of the ships of the former was 16,318, the tonnage of the Atlantic Steam Company’s ships was 12,029 tons. Was not aware of any offer having been made for those ships before the time of the transfer. Could not tell whether the ships were old or new. Garraway’s estate was estimated to realise 10,000l. It had produced 29,000l.

By Dr. Kenealy—The Atlantic Royal Mail Company’s steamers were also mortgaged to the Imperial Mercantile for 120,000l. The Imperial Mercantile had a claim on the old firm for 120,000l., and they took the ships at 90,000l., leaving them creditors for 30,000l. That 839,000l. would have to be increased by 30,000l., for which the new company had proved.

Dr. Kenealy here offered to put in some affidavits which had been made in some Chancery proceedings. He said he did this in pursuance of the request the Solicitor-General had made that they should be put in, but if he put them in he should reserve his right to reply on them.

The Solicitor-General objected to this.

Dr. Kenealy said he should certainly reserve his right to reply.

The Lord Chief Justice—You must not hold out the olive branch and conceal a dagger under it.

The discussion continued for some time, the Solicitor-General objecting to the affidavits only being put in, and insisting that the whole of the proceedings should be put in or none.

Mr. Mellish made the same objection on behalf of Mr. Barclay.

Mr. Giffard insisted on Mr. Rennie’s answer being put in if any of the other Chancery proceedings were put in.

Ultimately none of the Chancery document were put in, and the last witness,

Mr. J. C. E. Koch was called, and examined by Mr. M. Moir. He stated that the 243,069l. standing against his name, as if he were a debtor for that amount, was not owing by him. He was a mere agent of the company, and different sums were advanced through his agency to Mr. John Alexander Gordon, railway contractor, who failed in 1863, and to other persons, shares being taken as security.

In cross-examination the witness said that many of the shares taken as security were of considerable value.

This closed the case for the prosecution.

The Solicitor-General said, in reply to the Lord Chief Justice, that so far as he could then judge, he should not call any witnesses.

Mr. Mellish said he should have to submit on behalf of Mr. Barclay that there was no case against him.

The Lord Chief Justice (to the jury)—Then I hope, gentlemen, we shall conclude this case on Monday.

The court adjourned at a quarter past five till this morning.

The Daily News. Nr. 7367, 10. Dezember 1869. S. 2. THE BARNED’S BANKING COMPANY PROSECUTION.

Dec 10

Yesterday, for the sixth time, Mr. Charles Mozley and Mr. Lewin Barned Mozley, two of the directors of Barned’s Banking Company, surrendered at the Mansion-house on a charge of conspiracy.

Mr. G. Lewis, jun., conducted the prosecution, and Mr. Serjeant Parry and Mr. Poland conducted the defence.

At the last examination the sitting was occupied by the evidence of Mr. H. W. Banner, an accountant at Liverpool, and one of the official liquidators of the company. Yesterday this witness was recalled, and he entered very fully into the position of the bank both at the time of the transfer to the limited company, and of the failure.

In cross-examination by Mr. Serjeant Parry, the witness said:—Messrs. Barned and Co., to my knowledge, have been carrying on for some years a large and apparently increasing business as bankers. I had every confidence in them. My firm banked with them down to the failure, and are creditors for 7,000l. The defendants were held in the highest estimation in commercial circles as far as I know. I never found any necessity for putting them on their oath. They have readily given me every information that would facilitate the liquidation. Their answers have invariably been true, and have been verified by their books. The defendants have, I know, been completely ruined by this company. The executors of the late Mr. Lewin Mozley lost 20,000l. by it. He was the father of the defendant, Mr. L. B. Mozley. That defendant inherited a fortune, and has lost every farthing of it. I believe they had perfect confidence in the result of the transfer. They have been guilty of no secretion in the books nor of misconduct, so far as I am aware; on the contrary, I consider them most honourable men. The security box was handed to me by them. The securities were kept in such a way that would enable anyone to be easily aware of their nature. I believe every security was handed over. It has never been suggested that any securities were concealed. They consisted mostly of mortgages, bills of lading for produce, and other things. They were at the time of the transfer good and valuable securities, and I have no doubt they would have been generally so considered. Messrs. Barned, in my opinion, were thoroughly justified in looking upon those securities as valuable. I believe that if the debts of the ten firms so repeatedly mentioned in this case had been written off, the defendants would still have been able to carry on their business successfully. They must, however, have had no further dealings with the firms, and quietly realised the securities in hand. There was an increase in all those debts except one during the existence of the company. A strong management would have cut off those large accounts. To continue them was certainly a mistake, but not a fraud. I believe they were continued with no fraudulent motive, but that commercially it was a mistake. In nearly every case of a guarantee good securities were lodged. There was no security for a debt of Lafone of 6,460l. I don’t know of any other such debt. I think they were quite justified in believing the validity of the securities. The turnover, as I have before stated, was 37,000,000l. a year, at least. Country banks always charge commission; 1/4 per cent. on the entire debit side was usually the rate in Liverpool, but now it is 1/8th. That was and is a source of considerable profit. They charge, also, interests and discounts on bills. In 1862 the net balance earned by the firm on interests and commissions was 71,503l., in 1863 73,325l., and in 1864 91,367l. That showed a constantly increasing profit. Large fortunes, I know, have been realised out of this firm. The business with 7, 14, and 21 days’ bills was a peculiarly lucrative one, and without risk. It was worth to this bank between 10,000l. and 15,000l. a year. Mr. Charles Mozley paid 100,000l. into his firm just before the transfer. That was to counteract the effect of a serious defalcation and to strengthen the business. It was in March, 1865. After the stoppage Mr. Charles Mozley gave up the Beaconsfield Estate, which has produced 23,000l., and some property in Castle-street, Liverpool, for which we have been offered 50,000l. The former was a fair amount. The Castle-street property has been valued at 75,000l. there was a mortgage on it of 40,000l., but it has been reduced to 20,000l. by the payment to the mortgage of some of the proceeds of the Beaconsfield estate. Mr. Chas. Mozley had also a share, with Mr. Lewin B. Mozley and Mrs. Rebecca Mozley, of the banking premises at Lord-street, worth 69,000l. There is an old mortgage on it of 7,000l. At the time of the transfer 12,000l. stood to his credit, and at the time of the stoppage 4,880l. odd. Mr. L. B. Mozley was entitled to between 30,000l. and 40,000l. under his father’s will. That all went into the bank, and he has lost every farthing of it. At the time of the transfer he paid in 10,000l., and afterwards another 10,000l. At the stoppage 29l. stood to his debit. The executors of his farther had between 20,000l. and 30,000l. in the bank, but it was not transferred to the company. It was kept as a special liability of the firm. The executors have lost nearly the whole of it, with the exception of any little dividend that may be paid. Mr. F. B. Mozley, a relative, has lost 40,000l., and is a ruined man. At the date of the transfer M‘Henry’s bills were estimated at the value they represented. The Bank of England actually discounted his bills up to April, 1866. The Atlantic and Great Western Railway Company failed in 1866. It had not failed either at the transfer or at the issue of the balance-sheet. The bills of J. Baines and Co. were exceedingly good. At the transfer Messrs. Barned had certainly reasonable grounds for believing the bank would prosper; the more so as it was about to receive additional capital. At the stoppage the liabilities of the defendants under their deed were in round figures 883,000l. At the transfer 75,000l. was only owing by them, of which 24,000l. was due to the executors of the late Mr. Lewin Mozley. 49,000l. was covered by good securities, and 1,773l. consisted of small dormant balances not transferred. They owed really 1,770l. in all, exclusive of the family debt. That represented the whole of the liability as far as the public were concerned. They had then no contingent liabilities. Of the debts contracted, 251,000l. was the balance due to the company, which, being reduced by the 160,000l. agreed to be paid as goodwill, really stood at 95,200l. (Mr. Lewis—The deficiency on guarantees only was 1,500,000l.) That amount would be affected by the calls on shares, the 90,000l. worth of omitted acceptances, and the balance of the account generally. The contingent liabilities since the transfer amounted to 270,000l., due principally to nominees of shares whom they had guaranteed. A further item of 184,000l. was covered by securities, and there is no likelihood of any further claim in respect of either of these two accounts. J. Barned and Co. at the transfer had guaranteed only 1,308l. There were also 61,000l. on contingent liabilities, partly secured, and on which no claims are likely to be made. Another sum of 40,000l. is covered. That statement of the account is, to the best of my belief, correct. Mr. Charles Mozley’s separate debt was 283,000l. At the transfer he owed 639l. unsecured, and 53,000l. amply secured; the whole of which has been paid. 173,000l. of the whole debt was due on calls, 50,000l. on guarantees for the company, 2,800l. on calls in other companies, and 3,500l. in disputed shares. Mr. Lewin B. Mozley’s debt is 344,000l. At the transfer his debts were 12,000l., due to his father’s executors. That was an amount he had got in excess of his share, and had put into the company. He was also then liable on guarantees for 15,000l., and they were partly secured. After the transfer 235,000l. was due from him on calls, and 25,000l. on guarantees. Other disputed claims make up the 344,000l. In continuation, the witness, after giving other details, expressed an opinion that the defendants were thoroughly honourable men, and that the transfer was carried out in strict honour. They were thoroughly justified in their belief in the transferred accounts.

Mr. Lewis, at the close of the cross-examination, stated that although the failure of the company was a very proper subject for investigation, after the evidence of Mr. Banner, he would not be justified in pressing the charge. He therefore asked permission to withdraw it.

Sir James Lawrence—I think the prosecution was justified in having a full inquiry where so many interests were involved, and where the matter had caused so much conversation and remark, not merely in the City of London, but throughout the country. At the same I think, after the evidence of Mr. Banner, and after his clear expressions of opinion with regard to the defendants, the prosecutor would have acted wrongly if he had persisted further in the matter.

Mr. Serjeant Parry said the defendants had felt for many years deep regret, not only for the losses sustained by the shareholders, but for the transfer of their business to the company. They had, however, the consciousness of having acted honourably, fairly, and openly, and they were glad to hear that the withdrawal from the prosecution was approved by the court.

Mr. Lewin Barned Mozley, addressing Sir James Lawrence, said, painful as the inquiry had been to himself, his uncle, and to all the family, it was at all events satisfactory that they had at last been allowed a clear judicial inquiry into facts which had been very much misunderstood by the public. That inquiry had been conducted in a fair and impartial manner, and he was satisfied that he and his uncle would stand better now in the estimation of the public than perhaps they had done before.

The summonses were then withdrawn, and the defendants left the justice-room with their friends.

The Daily News. Nr. 7376, 21. Dezember 1869. S. 2. THE OVEREND, GURNEY, AND CO. PROSECUTION.

This trial was resumed at a quarter past ten yesterday morning. The court was crowded throughout the sitting, the public interest in the result having manifestly increased.

Dr. Kenealy continued his summing up for the prosecution. He said when he left off on Saturday he was speaking of a book called an “Abstract,” which was produced and referred to by Mr. Harding. The person who made that abstract was said to be Mr. Boys, the secretary of the defendants, and as there was some doubt about its origin he should have been called by the other side to remove it. The next witness to Mr. Howell was Mr. Slater, who attended to the allotment of shares, and that gentleman stated that in his opinion if the Stock Exchange had been aware that there was a second deed, it would have required its production. Turning to the evidence of Mr. Harding, the learned counsel contended that the jury ought to place no reliance upon the estimates of that witness, as it appeared to him that in but too many instances they had not been verified when put to a practical test. As to the contention that the bona fides of the defendants was unquestionably proved by the subsequent sacrifice of their private property, he reminded the jury that before the transfer the ruin of the defendants was already accomplished. They were really bankrupts, but, by inviting the public to bring in fresh capital, they had succeeded in putting off for some months the day of inevitable and absolute ruin. From 1851 to 1860 the firm divided as profits 1,468,000l.; from 1860 to 1865 they divided nothing, and what they had was carried to the guarantee fund. Had the sum of 1,468,000l. previously divided been carried to the reserve fund instead of being withdrawn, the business would still have been entirely insolvent on July 31, 1865. There had been an annual loss of 40,587l. for fifteen years, according to their own figures.

The Lord Chief Justice—As I understand, the loss occurred subsequently. The loss began about 1860. A man is not called upon to anticipate losses, and therefore to abstain from dividing profits. There was no evidence of actual losses which would have shown that they ought not to divide profits.

Dr. Kenealy contended that when the defendants were seeking to induce the public to subscribe for 5,000,000l. they had .no right to shut their eyes to facts. If they really meant to do justice they ought to have gone through their books, and have guaranteed that they were selling a really profitable business. They had been losing 40,000l. a year for the last 15 years.

The Lord Chief Justice—I cannot allow you to say that, because it is not correct. There was a loss for five years.

Dr. Kenealy would leave it to the jury to form their own opinion upon Mr. Harding’s evidence. They had heard a good deal about the Norwich Bank. That bank was also insolvent—if one went, the other must go likewise. The Norwich Bank made no offer of any advance at all. The goodwill of Overend, Gurney, and Co. was put down at 500,000l., that of the Norwich Bank at 500,000l., and the funds there at 591,000l., making 1,591,000l. 591,000l. was locked up in the Norwich Bank, and this was contingent upon the realisation of 2,000,000l. of paper.

The Solicitor-General—The paper was first-class paper. 1,700,000l. was paid.

Dr. Kenealy—That was long after. My learned friend will have the opportunity of addressing you afterwards. Dr. Kenealy contended that the whole of the estimate with respect to the Norwich Bank was delusive. It reminded him of the gammon of bacon which was said to be hung up in some Irish houses to deceive unsophisticated strangers into the belief that it was intended for consumption and not for show. The last witness with whom he had to deal was Mr. Turquand, and with regard to him he asked if any evidence could present a case of greater recklessness and extravagance? There was, for instance, 14,000l. put down to Peto and Betts, which was only a portion of 28,000l. spent on an unremunerative survey of a railway for which a concession was expected from the Turkish Government. It was irrecoverably gone; there was no chance of getting back a single farthing; yet here it was put down as an asset. The same might he said of the account of Xenos, put down as 140,000l.; but there was nothing to be recovered. So the Millwall Works were put down as an asset of 556,000l.; but they were mortgaged to the Norwich Bank, and the Norwich Bank did not proceed against the parties, because there was no chance of getting a farthing. Then Mr. Howard was put down at 134,000l.; but Mr. Howard had been released on the payment of 60,000l. One or two instances of this kind were as good as a thousand to show the unreliable nature of this suspense and guarantee account. To this suspense and guarantee account of 4,000,000l. the directors of the new company added 615,000l., while all that had been received was 600,000l., so that 15,000l. was lost to the shareholders. When they saw all this recklessness and waste, what was the use of the Solicitor-General going about to prove that a ship here and a ship there had realised more than its estimate? He looked at the whole amount, and he said there was no proof of bona fides in the whole transaction. The question the jury had now to ask themselves was whether any or all of the directors were guilty of conspiracy. No doubt the two Messrs. Gurney and Mr. Birkbeck stood in a different position from the other three directors; because, if there were any persons who must have had a knowledge of their position, the Messrs. Gurney and Mr. Birkbeck were those persons. It was easy to say that they found themselves in such a flourishing condition that they did not inquire. It was their duty to inquire; and they were guilty of laches if they went into the market without inquiry.

The Lord Chief Justice—The whole question is as to the state of their mind and the bona fides of their intention. In a criminal case, if it can be shown that an honest intention arose from ignorance, they are entitled to an acquittal. In a civil action the case would be wholly different. In a criminal case you must show actual knowledge of the facts, and that it was in spite of their knowledge that they put forward certain representations.

Dr. Kenealy said, that being the law which his lordship would lay down, it would be for the jury to say whether there was not good reason to infer that they had investigated. That there was no division of profits from 1861. to the time when the concern was sold showed that they had a knowledge of the facts. If there had been no division of profits for four or five years they were not entitled to represent it as a flourishing business. The learned counsel then referred to a letter drawn up by Mr. Gurney in May, 1866, evidently, he said, as an answer to any shareholder who might communicate with them. It stated, he said, that a meeting had been convened by some of the shareholders, at which it was considered that an effort might be made to resuscitate the concern, and that he argued was not sincere, the object no doubt being to throw the shareholders off their guard. Mr. Barclay’s guilty knowledge and complicity seemed to him to have been clearly established by his own deed, drawn up and executed at the time when he became a director, inasmuch as it showed that he could not have been entirely ignorant of the state of the company’s affairs at the time when he joined the board. Another proof of the mala fides of Mr. Barclay and the old directors was the manner in which the transfer of the Norwich Bank had been made, as the shareholders of the limited company had, under the deed, no right to the assets of that bank until 1870. It was provided that the Norwich Bank should keep the books, so that the shareholders of the new company were entirely at their mercy. Did they think they would ever get a farthing? He now came to the case of Mr. Gordon, and Mr. Gordon’s complicity in this matter was shown by the fact that he was the framer and writer of the rough draft of the prospectus, which contained statements of the most reckless and heedless character, and many things which were modified in the prospectus ultimately issued. He thought they would entertain no doubt that the rough draft of the prospectus must have been the subject of discussion at the meetings in St. James’s-square, and that  they had the assistance of their solicitor to enable them to escape the meshes of the criminal law. Then Mr. Gordon was present at the meeting to which Dr. Thom went, and at which Mr. Rennie said the whole of the directors had been large shareholders, and had large deposits to the close. Now there never was a more untrue statement, for they were only depositors to the amount of 10l.

Mr. Giffard—There is not one word of evidence given on the subject.

Dr. Kenealy said then he would withdraw that. Then as to the case of Mr. Rennie. Mr. Rennie was an active party to the second deed. He was a member of the board when the minutes were passed in reference to it. The summary of the whole case was this: He contended that the defendants were criminally liable in having made a promise not to call for more than 15l. a share, thereby leading to the inference that the property transferred was valuable, whereas the first 15l. per share was absolutely sunk. He contended that they were liable in having given a promise of a guarantee of principal and interest, which, in their insolvent condition, they knew to be worthless. He contended that they had no large pecuniary interest, as they alleged, in the concern, because all they had held was swallowed up. Then he contended that the 500,000l. which they got for the goodwill they got for that which was worth nothing; that they used the money of the shareholders to the amount of no less than 600,000l. in further advances on the old rotten accounts, and as they got only 600,000l. in return, they lost 15,000l. He said also that they deceived the Stock Exchange, the shareholders, and the public into the belief that there was only one deed which contained all the covenants. The Stock Exchange required the production of all documents relating to such matters, and on the 12th of August they sent the first deed, which had been executed on the 27th July, ignoring the second deed, which had been executed on the same day, and that the suppression of the latter was dictated by mala fides. He said that they executed a secret deed for the purpose of converting the property of the shareholders to their own purposes. He said they were guilty of deceiving the shareholders when in the 58th of the article of association of the limited company they said a profit would be realised from the paid-up capital, when they knew that all the paid-up capital would be absorbed by the liability on the suspense and guarantee account. He said they were guilty of deceiving the shareholders in saying that 500,000l. was to be retained in the hands of the limited company when they had determined that it should be applied to the payment of their own debts. He said that they were guilty of a fraud in pretending to transfer 15,000,000l. of assets against the same amount of liabilities, when in fact they transferred only 11,500,000l., leaving a deficiency of 3,500,000l. He said they guaranteed debts which they knew to be bad, and even wholly irrecoverable. He said that they deceived the shareholders by wilfully withholding from them any information as to the real value of the excepted accounts. He said that they knew the excepted accounts to be worth only a small part of the four millions which they amounted to. He said there was a secret and fraudulent agreement to pay the money of the shareholders in reduction of the liabilities on the excepted accounts, and even to put it into their own pockets. He said there was a fraudulent appropriation of 615,000l. under that agreement. He said there was a fraudulent agreement to continue the suspense and guarantee account three years and five months. He had now closed his case, and had come to the close of his duty. He had to thank his lordship for the great indulgence he had shown him in the position in which he was placed from the case not being put into his hand Friday afternoon. The defendants had the advantage of being defended by gentlemen of great ability and of first rank at the bar, and it was right that they should have that aid. The defendants’ counsel had not thought fit to call any witness, and, of course, they were entitled to say, “We do not call witnesses because you have not made out the case.” But it seemed to him it would have been, on the whole, wiser if they had called witnesses. As he said at the beginning of his remarks he repeated now—if he had used any epithet in the heat of controversy that was improper he now withdrew it, and if the jury at the close of this case should feel it their duty to give the defendants the benefit of any doubt they might have, no one would rejoice more than he should. But it must be a reasonable doubt, not such a doubt as would be felt when an American said he said he had seen a sea serpent 150 feet long. If the defendants were guilty they deserved punishment; but if they were innocent, God send them a “good deliverance.” (Slight applause, which was instantly suppressed.)

The Solicitor-General then opened the defence. He said he appeared there for Mr. J. H. Gurney, Mr. H. E. Gurney, and Mr. Birkbeck, in conjunction with his learned friends, Mr. Hawkins, Mr. Serjeant Ballantine, and Mr. Matthews. The other defendants were in far abler hands than his, and he would endeavour in anything he should say not to interfere in any manner with what his learned friends might have to say. This, however, he might say, that none of these gentlemen would attempt or desire to make a case for themselves at the expense of any one else. The acts charged in the case were the acts of all, and though there might be—he did not say there was—though there might be a difference in the motives and some unlikeness in the position of some of the defendants as compared with others, yet to a great extent there was common action in all. Messrs. Gurney and Mr. Birkbeck heartily rejoiced that the time had at last come when an authentic and judicial opinion might be passed upon them for their actions. Of unjudicial opinion they had had enough. They had had to live for years in an atmosphere of misrepresentation that was most stifling, and untiring had been the efforts of those opposed to them to cloud by misstatements the real state of the case. His learned friend himself, in opening this case, seemed to think it necessary to do so in a strain of fierce invective, of extravagant language for which in the course of his experience he could recollect no parallel. He told them that no such case of gigantic fraud had ever been presented since the days of the South Sea bubble; that they did what they had done with the most cool and cold-blooded determination to defraud the public; that by their devices three millions of money had been juggled out of the pockets of the public into their own; that for gamblers they might have some compassion, but that for men like the defendants they must have scorn, but no pity. These were some, but not, perhaps, the choicest, of the flowers in the rhetorical garland with which his learned friend—executing all the while a sort of war-dance of exultation—had adorned the victims as he led them to the sacrifice. It is true that he reserved Lucius and Junius Brutus to his peroration; but he did not wait till then for his description of the South Sea bubble and King George the First—a matter which he must have known had about as little analogy to the case they now had to try as anything in the whole range of our criminal jurisprudence that could possibly be selected. His learned friend also thought proper to read some portions of the judgment of Lord Ellenborough in the case of Lord Cochrane, and he called Lord Ellenborough an illustrious judge. For force of language—for a mind of mingled ability and strength—he had as great respect for Lord Ellenborough as any man could have. But if he were about to found a claim to call him an illustrious judge, he certainly should not have selected Lord Cochrane’s trial for his panegyric. It was a case in which, as every one knew, he brought all the wonderful powers of his mind to crush a political opponent. He forced an exhausted advocate to address the jury after midnight, and he obtained from the jury, oppressed and borne down as they were by the prejudices of the time, a verdict against that man which the almost unanimous judgment of the country had long since reversed. If he were to put before a jury what was their duty in this respect he should point to this example as a warning and a beacon to avoid, rather than as an example to follow. Now, what was the object of this indictment, or of the prosecutor’s case? To get the property back from Messrs. Gurney? They were ruined. To insinuate that the profits of the business went into their pockets, and were kept back from the public? It was all gone. They knew—it had been proved in the course of this case—that of every shilling which the Messrs. Overend and Gurney possessed they had been stripped; their life interest, their reversions, their private properties, all had gone—not unjustly. He said nothing against it—but they had all gone to pay the debts which these gentlemen were bound to say. They knew well enough that Messrs. Gurney and Birkbeck, but for the kindness of their friends, must have been by this time brought into a state of absolute destitution; and they had no consolation, under these circumstances, but the satisfaction that at least they had saved their honour and their name, and they have earned the luxury—a luxury which the rich did not enjoy—the luxury of gratitude at the expense of all they possessed. In the Court of Chancery, as his learned friend has told you, they had the power, if affidavits were made, of cross-examining the persons so making them. They took them into Chancery under the power of a penal Act of Parliament which compelled them to disclose everything they had done, be it right or be it wrong; and having got information in that way, though they do not impute to them that they made a single false declaration, they turned round and subjected them to criminal prosecution. It is true they could not be tried formally upon this evidence, because the same Act provides that evidence so obtained shall not be used criminally. What we are trying here is, were the Messrs. Gurney and Birkbeck guilty or not guilty of issuing a false prospectus? Now the evidence on this subject was first obtained by civil proceedings in Chancery, and then they proceeded by criminal prosecution. Whatever that point of law might be worth, the Messrs. Gurney scorned to take advantage of it, but they pointed it out to you, through him, as showing the manner in which they had been tested, and the spirit in which this prosecution had been conducted. If this were, indeed, a public prosecution—if his learned friend were a high priest of justice prosecuting some great criminal, he would be deserving of all honour; but he thought he should be able to show them, before he sat down, that the public spirit and the desire for public justice on the part of the prosecution might be measured by the evidence of Mr. Howell, and by the spirit which his learned friend had been instructed, totally foreign to his own nature, to import into the case. The defendants were charged with issuing a false prospectus. The prospectus ran as follows:—“Prospectus of Overend, Gurney, and Co.(Limited).—Capital, five millions, in 100,000 shares of 50l. each, of which it is not intended to call up more than 15l. a share. Deposit on application, 1l. a share; 5l. per share on allotment, 4l. per share on the 15th Sept., and the same on the 15th Dec. The company is formed for the purpose of carrying into effect an arrangement which has been made for the purchase from Overend, Gurney, and Co., of their long-established business of bill brokers and money dealers, and of the premises in which the business is conducted. The consideration for the goodwill is 500,000l., one half being paid in cash and the remainder in shares of the company, with 15l. a share paid thereon, terms which, in the opinion of the directors, cannot fail to be highly remunerative to the shareholders.” Was that intended to deceive? Then it went on—“The business will be handed over to the company on the 1st of August, the vendors guaranteeing the company against any loss on the assets and liabilities transferred.” Now here he would pause to ask if any one supposed that the transfer of the enormous business of Overend, Gurney, and Co. was done without some reason. There was no doubt that considerable losses had been incurred, and an infusion of new blood and new capital was desirable. The prospectus went on to say—“Three members of the present company have consented to join the board, and two of them, Mr. Henry Edmund Gurney and Mr. Robert Birkbeck, will be managing directors; and it is proposed to retain the services of the experienced staff. They will pay attention only to first-class business. Copies of the articles of association, as well as of the deed of covenants on the transfer of the business, may be inspected at the office of the solicitor of the company.” Well, that was said to be fraud, and was a mere bubble, to be paralleled only by the South Sea bubble. It was a long-established business, from which one partner after another had been looked up in unprofitable speculations, or loans to companies which had failed, and, in some instances, committed fraud. As they were aware, a bill-broking and money-dealing business was to a great extent a matter of credit; but a large amount of available capital was required, and it had become necessary that a large amount of new capital should be brought in. His learned friend, in his remarkable address, said there had been a loss of 40,000l. a year in the last ten years. He might as well have gone back 20 years, and said there was a loss of 20,000l. a year, or 40 years, and said there was a loss of 5,000l. a year. But there could be no doubt that the average real profit for a number of years had been from 180,000l. to 190,000l. a year. That was the evidence of Mr. Harding, and his learned friend asked him no question upon it, though he knew that that was the very root of the case, and his learned friend had no right in a criminal case to say this or that thing was not to be relied upon, when he had the means of showing it was not true, and refrained from doing so. No one said that the money-dealing and bill-brokering business suffered in the hands of the limited company; and it was clear that there was a valuable business to be disposed of. The partners had enormous private wealth and various securities as a set-off against the lock up of 4,000,000l., and the whole case against the defendants de-pended upon whether the estimate of the assets was bona fide and reasonable, not whether the result was satisfactory. Now, how did the old firm set about the formation of a new company? If they had wanted to commit a gigantic fraud, what would have been easier than to have quietly withdrawn their capital from the business, to have realised their vast landed estates and their large life interest, to have placed the proceeds in the hands of trustees, or settled them upon their wives and children, and having thus drawn their neck out of the noose, to have left the house of Overend, Gurney, and Co. to get into bankruptcy? In that way they might have made large purses for themselves, laughed at their creditors, and, like too many others, after paying nothing in the pound, have continued to enjoy apparently all the blessings of life. If they designed fraud, they had, according to his learned friend, an agent ready at hand in Mr. Jones. What, however, was their actual conduct? From 1860, when the losses had become serious, they divided no profits, and having stopped all imprudent advances they proceeded to make over to the Limited Company the legitimate business of money dealing and bill-broking, while they rendered themselves and their private properties responsible for past losses. They took upon themselves every single bad asset. Dr. Kenealy had persistently confounded assets with liabilities, and assumed that the liabilities were transferred to the Limited Company; but never was greater care exercised than was used to prevent such a transfer. The bad debts were to be provided against, and if that could have been done, and the earning power being what it had been, and the general position of the company perfectly sound, Overend, Gurney, and Company (Limited) would have been a great success. If the losses could be met the business would be valuable. Could they be met? That was the question. The jury had heard that there were a consultation and a valuation, and if the valuation entered into at the time were a fair and reasonable one, he ventured to say, subject to the opinion of his lordship, that practically there was an end of that case. Was, then, the valuation of Messrs. Gurney at the time a fair valuation? Some of it fact, some of it estimate. His learned friend attacked it, forsooth, because it was an estimate. He said—I will not have these flowery oriental figures; I look to facts; I look to see what actually passed into the hands of the liquidators; if the assets did not realise, under every circumstance of depreciation, distress, and disadvantage, every farthing of value which Messrs. Gurney put upon them in 1865, I shall treat the realisation as a fact, and the estimate as a fraud. His learned friend must excuse him for saying—What rubbish ! How could properties of that kind have been dealt with except in the way of estimate? Supposing any member of the jury had given a guarantee which was founded on an estimate showing that his property was worth 20,000l., and supposing he were afterwards called upon for the money, would it be a ground for charging him with fraud that the property realised only 15,000l.? The question in this case was, how much at the time the property in question was honestly supposed to be worth. The bank at Norwich was set down at 590,000l., the land at 556,000l., the sundries at 613,000l., the reversions at 92,000l., and the life interest at 97,000l., and the goodwill of the Norwich Bank at 300,000l., making a total of 2,248,000l. As regarded the item for the Norwich bank, there could be no doubt that it was perfectly fair. As to the value of the land, his learned friend by the course he had pursued had shut the mouths of the defendants; but in the opinion of two of the first authorities in London, Mr. Harding and Mr. Turquand, that estimate was perfectly fair. His learned friend complained of “sundries” as a vague term, and said that there were great delusions under general names. “What,” said his learned friend, does Mr. Harding, with his Oriental imagination, mean by such an expression? Mr. Harding carried on his business in the “East Central” postal district, but beyond that fact there was nothing to warrant his being described as “Oriental.” (Laughter.) Mr. Harding would excuse him for saying that poetry was the last thing of which he (the Solicitor-General) should have suspected him. (Laughter). “Sundries,” Mr. Harding said, included property of various kinds, of which he had the selling, leasehold houses and various other things which came under the general description of personal property; and Mr. Harding thought that in July, 1865, 613,000l. was a fair estimate of the value of that property. He thought, too, that 97,000l. was a moderate estimate for the life interests. There was a reversion of 20,000l. a-year belonging to Mr. John Henry Gurney which had not been sold. The cause of that being that Mr. Gurney was nearly crushed by this calamity, and his health having broken down, persons might have supposed that they were asked to buy the interest of a dying man. As to the goodwill of the Norwich Bank, Mr. Harding believed the profits of that bank to amount to 80,000l. a year, and, supposing that to be the case, four years’ purchase could not be an excessive estimate. These figures made up a total of 2,248,281l. Further, there were partners’ balances in the private ledger amounting to more than 1,000,000l., consisting of profits which might have been, but had not been, divided, and which were standing to their credit in the books of the firm. Well, then, there were the excepted accounts. These were, as he had stated before, bad assets, bad in such a sense that it was not at all likely that the debt would be paid in full. Securities were hold against those debts; their value was estimated at 1,082,000l., and both Mr. Harding and Mr. Turquand considered that estimate a fair and moderate one at the time. There was, then, evidence that there was a fair and legitimate estimate showing that there would be sufficient to meet every possible demand in respect of the 4,213,000l., and even leave a surplus, without taking any account of the goodwill. One of the jury remarked the other day, with a manliness which did him honour, that the goodwill was all a myth. He admitted that if, in the view of the jury, as reasonable men of business, there was at the time no hope of meeting the deficiency, there might be some foundation for that notion, though the goodwill of a business which had been earning from 180,000l. to 190,000l. a year must have been worth something; but, according to the estimates, there was abundant property in the hands of the Messrs. Gurney to meet any possible claim on account of these bad debts. In a criminal case the only question was, were they bona fide and reasonable estimates at the time?—and, if they were so, how unjust, how cruel, how contrary to common sense it was to say that because they had not turned out as well as those who made them excepted they were a set of fraudulent knaves! As regarded the Chancery proceedings, he had no wish to enter into personal matters, but he must say that his learned friend must have known that what was wanted by counsel for the defence was not mere affidavits, but the answers made by the defendants upon oath in proceedings with which they were parties, and in which they set out their own case. His learned friend might, if he had chosen to do so, have put in the answers made before the Vice-Chancellor, in proceedings in which the defendants made a clean breast of it. He said, however, that he knew nothing himself about that matter, and he (the Solicitor-General) was bound to accept his assurance. As these men were being tried on charge of conspiracy, the question was whether they had a deliberate, wilful, intention to defraud at the time when they made the transfer, and if the jury should not be satisfied of that they were entitled to an acquittal. It was excessively unfair to judge of a matter of that kind by the event. There must, he contended, have been bona fides as regarded the estimates, for this reason, that by the transfer which took place the old firm could not gain a single sixpence, or relieve themselves of a single sixpence of liability, unless the new scheme were successful. They could not gain a single sixpence because the goodwill was at once written off the bad debts; they could not relieve themselves of sixpence of liability because they made themselves responsible to the new company, at the expense of the whole of their private fortunes, to pay the bad debts. Now what would persons who desired to act with perfect fairness do under such circumstances? If it were the case of the jury could they do more than call in four perfectly independent, intelligent, rich, respectable men, place the state of their affairs absolutely and without reserve before them, and say to them “Shall we go on or not,” being bound by their answer? Could there be a stronger mark of bona fides? But they did more, they not only said to those four men “Shall we go on?” but “Will you join us in carrying on the concern?” What earthly motive could Mr. Barclay, Mr. Gordon, Mr. Rennie, or Mr. Gibb have for joining in a fraud? Would men of high position and great wealth, men on whose character there rested not a shadow of suspicion, have been called upon to join in committing a fraud? Might they not in that case have been put into the witness-box and questioned as to whether they did not advise Messrs. Gurney not to go on with their scheme? Nobody had suggested that anything was kept back by the old directors from the new ones; and he  craved in aid the character of the new directors, as showing that his clients must have been perfectly innocent if any fraudulent intention. He was not going to say that everything turned out according to the estimates; but the jury knew, as men of business, that the value of property varied, and that men were in that respect often the victims of circumstances. Now he might stop there, and say that if the jury were satisfied with what Mr. Harding and Mr. Turquand said about the estimates, there was an end of the case for the prosecution; but as his learned friend had surrounded the case with a number of suggestions which were more ingenious than merciful, and had made attacks and sown insinuations extending over nearly all the persons connected with the case, and even his own witness, it was necessary to go into other matters. What was the course pursued by his learned friend with regard to Mr. Jones? Mr. Jones, let it be remembered, was called by his learned friend himself—he was no volunteer—and his conduct and demeanour in the witness-box must have been observed by the jury. His learned friend said he did not want to cast any imputation of wilful and deliberate falsehood upon Mr. Jones, and that he made every allowance for a man who had been for forty years connected with the old firm of Overend and Gurney. From Mr. Jones’s appearance he (the Solicitor-General) inferred that Mr. Jones could not regard it as a compliment to suppose that he had been engaged in business for forty years; his firm might have been so, but his own age could hardly exceed that period. His learned friend went on to say that Mr. Jones’s firm must have received vast sums of money from Overend and Gurney in the course of his professional employment, and that that would naturally create a bias; adding that they all knew that persons were lenient towards the errors of their friends; that the circumstances to which Mr. Jones referred happened as long ago as fifteen years, and he did not think he was guilty of any deliberate design to conceal. Some persons might like a candid friend, for his own part he liked an open one. There was nothing in Mr. Jones’s statement to justify the observations that his learned friend had made, nor did he think the jury would believe that there was anything suspicious in the confidential solicitor of Overend, Gurney, and Co. being present at the meeting. Nor did he think it could fairly be said that there was anything suspicious in the meeting being at the house of Mr. John Henry Gurney, in St. James’s-square. Then it was said there was something suspicious in the fact that Mr. Braithwaite was one of the arbitrators under the Norwich deed, and his learned friend made the important discovery that one of Mr. Braithwaite’s Christian names was Beavan, a circumstance which seemed to his learned friend to be a dark feature in the case. Well, the deed appointed three arbitrators, Mr. Joseph Barclay, Mr. Joseph Gurney Hoare, and Mr. Joseph Bevan Braithwaite, and provided that they should be called upon to act in the order in which their names were mentioned. He wondered, while his learned friend was about it, that he did not attack Mr. Fooks, who seemed to have had more to do with the drawing and settling of the deeds than anybody else. His leaned friend said the bona fides of a transaction was generally to be determined by the fact as to whether the verbal or written instructions were given by the solicitor; the spoken word passed away, or at best was preserved by frail memory, but the written word remained, and might at any time be brought up in judgment against the party who wrote it. Now he asked whether that was the way in which a criminal proceeding ought to be conducted in this country? Mr. Jones was in the box two hours, and his learned friend did not treat him as a man unworthy of credit, and when he was out of the box, when no explanation could be given by him, his learned friend, in the discharge of his duty as “a priest of justice,” thought it his duty to insinuate that Mr. Jones deliberately gave instructions verbally and not in writing, simply because the writing might be brought up hereafter against him in judgment. He asked if there was anything whatever to justify those gross insinuations against the character of Mr. Jones, and if it was not disgraceful to make insinuations for which there was not the shadow of a pretence? Then it was said that the deeds themselves were fraudulent, because two deeds were prepared instead of one, and that one was concealed. Now the first deed was the deed of transfer of the business; but the object of the deed was more than that. It was to point out that there was a good deal of the old business which for various reasons it was thought should not be transferred to the new company, but should remain in the hands of the old firm. The excepted accounts were to remain in the hands of the old firm, who were to have three years and a half in which to wind them up. By the 11th and 12th sections there was a general guarantee, not only of the excepted accounts, but of the value of the assets that were taken over, and by the following clauses it was stated that it had been agreed that certain debts should be taken over as part of the assets, pointing out as clearly as could be that there were certain things to be transferred, and others that were not to be transferred. It was all very well for Dr. Thom to say he did not know of the second deed; but the question was, was there any concealment? There was an elaborate provision in the first deed as to the manner in which the accounts should be dealt with; and he wanted to know how his learned friend could say that there was not notice to all mankind that there were accounts which the old firm of Overend and Gurney were to wind up. The second deed dealt substantially with the excepted accounts and the excepted accounts alone, and that showed that the excepted accounts were to be retained in the hands of old firm; but if there was any benefit to be derived from them it was to go, not to the old firm, but to the new; and if in the winding up of these matters it was necessary to expend money, the old firm was to have a credit with the new, the limit of which was to be two months. Now, that was said to be fraudulent; but he could not imagine anything fairer. And when his learned friend talked of its being a fraud that they should have three years and a half allowed them to wind up these excepted accounts, it should be remembered that they were dealing with millions, and that the allowance of three years and a half was anything but a merciful mode of dealing with the members of the old firm. It was said that the sight of this deed would have deterred any man of sense from entering the Limited Company. Dr. Thom said it would have deterred him. Whether it would or not depended simply on this: were the guarantees given sufficient to cover the excepted accounts in the case of winding up? The whole matter came bank to this: was the subject-matter dealt with by the deed covered by the property of Overend, Gurney, and Co.? If it were, it was as honest a deed as he ever met with; if it were not, that did not prove that these gentlemen had been guilty of conspiracy, for they might merely have made a mistake. Then, said his learned friend, Mr. Jones in a moment of candour let out that he gave instructions for two deeds. In common fairness, that should have been asked of Mr. Jones while he was in the box. What was there in the circumstances as detailed by Mr. Jones calculated to arouse suspicion? It was on the eve of a general election, and they had arrived at a time when, if the business was to be done at all, it must be done at once. The counsel thought there should be two deeds instead of one, and Mr. Fooks, besides being a great conveyancer, had, it seemed, a turn for politics, and was going into the country to seek the suffrages of some constituency, and he could only be brought to approve of the first deed in time to get the prospectus out. The brokers said the prospectus must come out at once, and it was issued on the 12th of July, before Mr. Braithwaite and Mr. Fooks had even touched the second deed, and the second deed was not approved till after Mr. Fooks’s return to London. The first deed, however, contained the whole of the facts, inasmuch as it pointed out what was to be transferred, and that there was a great deal that was not to be transferred; and it therefore gave the outline—the leading feature—of the whole arrangement; and the second merely pointed out the particular way in which the excepted accounts were to be dealt with. His learned friend said it was a most remarkable circumstance that five resolutions relating to shares were entered in a separate book. Nothing could be more simple, or more in accordance with the practice of joint stock companies. Mr. Slater told them that all the earlier transactions of the new company took place at the office at which the shares were allotted. There was one set of minutes which had to do with the allotment, another set which had to do with the operations of the company after the allotment; and nothing could be more conspicuous than the use of separate books for the two. Moreover, in the latter book there was reference to the resolutions in the former. His learned friend commented on the fact that only one deed was sent to the Stock Exchange, as if there were some improper motive for withholding the second deed. Unless Mr. Jones were instructed by the directors to withhold that second deed, or unless the Messrs. Gurney knew that it was withheld, there could be nothing in that matter to affect the issue before the court; and there was the solemn declaration of Mr. Jones that neither directly nor indirectly, from Messrs. Gurney or anybody else, did he receive instructions, or any communication whatever, as to whether one deed should be sent or two deeds. Mr. Jones said he thought that the first deed represented the essence of the transaction, and that there was not the slightest occasion to send any other, taking upon himself the whole responsibility, if there were anything wrong. If the jury believed that statement it settled the question with regard to the withholding of the second deed. His learned friend said “Mr. Jones has a frail memory, and his conscience might not be powerful. I do not say that he is perjured, but beware of Jones.” (Laughter.) Now, he (the Solicitor-General) maintained that that was not fair. It was not creditable to our jurisprudence that Mr. Jones should have been treated as he had been; but that seemed to be the only way in which his learned friend could grapple with his evidence. It was very difficult to understand what his learned friend meant with regard to that second deed. He said that it was secret and fraudulent, that if its contents had been known, nobody would have touched the concern; and then, turning to the first deed, he said that the “snake” or “cloven foot” was seen there. Form that he went on to declare, in effect, that he did not care about the deeds at all; that the defendants knew that what persons placed faith in was their names, and there was fraud therefore in the use of those names. He (the Solicitor-General) could not understand how there could be fraud in simply making use of a great reputation honestly acquired. He now came to a matter which he approached with great reluctance, lest he should say anything which might appear unfair to a good and honourable man. His learned friend read the letters of Mr. Daniel Gurney to Mr. John Henry Gurney, and asked the jury to infer that the Gurney family knew perfectly well that a fatal catastrophe was impending. Now he (the Solicitor-General) was not going to deny that the transfer of the business was an operation rendered necessary by the bad debts which had been incurred—if there had been no bad debts no transfer would have been required; nor would he deny that the bad debts were so large in amount that in certain events the property of the Gurneys was likely to be required to meet them. Of course the Messrs. Gurney would not have handed over 180,000l. or 190,000l. a year to other persons if they could have kept it themselves. But, as he understood the matter, his learned friend read these letters to show something much worse than that. He praised Mr. Daniel Gurney as one of those old and honourable men who made the reputation of the bank, as a man who read the Ten Commandments, and he rather cracked him up as a good specimen of a fine old English merchant. He did not appear to perceive that he was making an attack on that fine old English merchant by representing him as a gentleman who assented to what he described as a fraudulent operation. The letter of Mr. Daniel Gurney to his nephew, Mr. John Henry Gurney, dated May 26, 1865, was endorsed by the latter, “D. G. as to estimate of surplus.” Nothing could more clearly show than that endorsement did that Mr. John Henry Gurney thought at the time that there would be a surplus. In a subsequent letter Mr. Daniel Gurney said that he felt great objection “to our joint and several guarantee for the deficiency of the new company,” and thought the marriage settlements of his children ought not to be placed after the liquidation. A letter more indicative of bona fides, or of a belief that there could not be anything beyond a heavy loss on the private estates, he could not conceive. The effect of what Mr. Daniel Gurney said was this—You propose to us that we should give certain bonds making us responsible to the limited company for a certain deficiency. I have already given my bonds to members of certain families with which I am connected to secure marriage portions to my son and daughters, and if it should turn out that my property is seriously damaged by this fresh security which you call upon me to give, so that I am not able to pay what I have engaged to pay, the fathers and mothers may turn round upon me and say—What right had you to do that? You were bound as a gentleman to keep us safe.” I doubt whether that would be considered honourable which might have the effect of diminishing my estate. “But,” he added in effect, “I feel that the transaction is upon the whole a good wise one, and, after all, you must do what you propose if you think it right.” Mr. Daniel Gurney went on to say—and this was most important—that he was a man of moderate wealth, while his nephew (Mr. J. H. Gurney) was a man of large wealth, and that he was very much obliged to him for what he had said about making a sacrifice in his favour when it came to an appropriation of the losses. They had not had the letter of Mr. J. H. Gurney to which that referred; but could anything be clearer than that in it Mr. J. H. Gurney had stated that he had enough and to spare? His learned friend had not scrupled to insinuate that entries in a book had been manufactured for the purpose of producing a favourable impression on the jury; but nothing of that kind was said with regard to these letters, and he was satisfied that the jury, viewing them by the light of common sense, would feel that he had put the right interpretation upon them. He had referred to them with pleasure, because, in his opinion, they were creditable to both the parties concerned. His learned friend asked the jury to believe that the directors of the old firm were guilty of fraud because, as he said, the working of the concern after the 31st of July, 1865, was fraudulent. Even if it were so, that remark was not a fair one, as the court had to consider the state of things, not after, but before the new company was afloat. But there was, in fact, no foundation for the statement. To suppose, indeed, that accounts amounting to 4,000,000l. could be wound up without some advances being made would be absurd. One advance was on account of two ships; but in cases in which there were prior mortgages, it might well be necessary to pay off a first mortgage in order to retain the security given; and in this instances, whenever money was advanced, it was advanced in order to minimise the loss. A great deal had been said about Mr. Harding’s statement, that in the last four months of the new company’s operations the withdrawals were at the rate of 1,000,000l. a month. It was quite clear from the general ledger that withdrawals to the extent of nearly 2,000,000l. did take place. The book to which Mr. Harding referred was one which had been kept regularly ever since 1847, and there was no ground for supposing that it was not as authentic as any other book which had come into the hands of the liquidators. But how did his learned friend deal with it when he found that Mr. Harding had explained the apparent discrepancy between his evidence and that of Mr. Howell? Why he charged Mr. Boys, the secretary of the old company, in language which no man could mistake, with fabricating a book for the purpose of telling a falsehood, and conveying that book into Mr. Harding’s possession fraudulently, so that Mr. Harding might find it and might give to the jury false evidence when he came to be examined here. There was not a title of foundation for such a charge, and no consideration on earth should have induced his learned friend to make it. But if he did not mean to make that charge, what did he mean to say? He said Mr. Boys accidentally left the book at Mr. Harding’s office, and that Mr. Harding found it there. What did he mean by that? The Lord Chief Justice asked him if he asked the jury to draw the inference that this was a fictitious book, and his learned friend said neither yes nor no in reply to that question, but said the book ought not to have the same reliance upon it as was placed upon the general ledger. Now he (the Solicitor-General) said when a man made an accusation of that kind, and was asked whether he made it, he ought not to avoid answering the question, but ought to deal with it like a man. He felt he ought to apologise to the jury for going into this, because, except for the purpose of showing the spirit of the prosecution, he could not for the life of him see what it had to do with the matter. One point was that the totals as shown by this abstract were considerably greater than the totals shown by Mr. Howell, but that was because Mr. Howell did not take into account the balances on the current accounts which were kept in the general ledger. Mr. Harding was obliged to admit that his figures did not correspond with Mr. Howell’s, because Mr. Howell had left out of account the general ledger, and in that book there were some 500 accounts. Well, he (the Solicitor-General) had gone to the general ledger, and he found that on one account on which there was 12,000l. in hand on the 31st December, there was only 1,300l. on the 30th of April; on another the balance was reduced in the same period from 16,367l. to 2,848l.; on another the balance was reduced from 13,429l. to 3,322l.; another from 153,186l. to 31l. 7s. 6d. and from 89,424l. to 47,507l., and another from 109,000l. to 116l. 4s. He did not pretend to say that these made the whole difference, but there were 500 accounts, and if the book were examined it would be found that on a large number of them the balances were largely reduced, and that the aggregate amounted to a very large sum. Then there was another matter. His learned friend was instructed to say that there were no discounts at all effected by the company within the last ten days, but Mr. Howell said there were, and in fact they discounted to the amount of 892,000l. in the last seven days. Then his learned friend told them that these defendants had acted as fraudulent directors would do, that they had all drawn out their deposits, and Mr. Howell had written a pamphlet, in which he said Mr. Thomas Gibb was the only director who did not withdraw the whole of his money prior to the collapse. He was asked whether that was true, and he was obliged to admit that it was not true. It was an absolute fabrication. His learned friend was instructed to cast another imputation. He called his attention to it at the time, and told him it was groundless, but his learned friend persisted. He said that Mr. Head, the brother-in-law of Mr. John Henry Gurney, had parted with his shares and had paid no calls. Well, Mr. Howell turned to the share ledger, and found that Mr. Head had paid 40,000l., but his learned friend made no apology for having made that imputation. His learned friend, of course, did not know the facts, but Mr. Howell did. Another imputation made by his leaned friend was, that when the stoppage took place the cash book of the company was mutilated, figures were erased and others substituted, and that the legitimate cash in hand was considerably reduced, and fresh balances were struck. Now, a book not a cash book, but a book containing a copy of certain securities, was put forward, and Mr. Harding was asked if it had been mutilated, but he said it did not appear to have been. And that was the only foundation for that imputation. Well, then, at the time of the crash what was the conduct of the directors? Why, they every one of them stuck to the ship. The Gurneys and Mr. Birkbeck were ruined, and Mr. Barclay, Mr. Gordon, and Mr. Rennie would have been ruined if they had not been very rich men, but they suffered frightfully, and Mr. Gibb also suffered to a frightful extent. There was one other matter which it became him to deal with, and that was, the letter of Mr. Birkbeck to Mr. Peek, on the 23rd February, 1866, in which he said that everything was going on satisfactorily; and a letter on the 14th April, in which he assured him that there was not the slightest ground for the adverse rumours; and that, with the exception of the debts of Pinto, Perez, and Company, they had not made a single bad debt. But he did not think these letters proved anything against Mr. Birkbeck. They merely showed that there were difficulties which he hoped to overcome. Mr. Howell, with a view of wounding Mr. Birkbeck, showed that Mrs. Birkbeck drew out 812l. which had been standing in her name. But what was done with the money? Why, it was invested in shares of the company itself. Could there be a stronger proof of the bona fides with which Mr. Birkbeck wrote that letter? Dr. Thom, in a pamphlet which he had written, had attacked him for what he had said on this case elsewhere, but he would take the liberty of repeating here what he had said elsewhere, that be the defendants guilty or be they innocent of the charges made against them, he only wished that everyone who was engaged in that trial could be capable of such acts of magnanimity as these gentlemen had shown in this transaction. (Applause.) They must all feel sympathy for Mr. Peek, who had lost a great deal of money, and the jury would remember the account he gave of the interview between him and Mr. Birkbeck. What did it amount to? It amounted to this, that Mr. Birkbeck, like a man of honour, was deeply sensible of the blame that would attach to him for the failure of this company; he was talking to a man he had known, who had lost largely, and he said, “If you will only abuse me it will relieve my mind,” But the jury would remember that they had only heard Mr. Peek’s account of that conversation, and that possibly Mr. Birkbeck’s version of it, if he could give it, which he could not, for his mouth was shut, might be different. He had now only one other topic to refer to, and that was the excepted accounts.

The court then adjourned at half-past 4 o’clock till a quarter past 10 this morning.

The Daily News. Nr. 7375, 20. Dezember 1869. S. 2. THE OVEREND, GURNEY, AND CO. PROSECUTION.

This trial was resumed on Saturday morning, the Lord Chief Justice taking his seat on the bench at a quarter past 10.

Mr. Moir said Dr. Kenealy, who had not yet arrived, wished to begin this morning by having the deeds read throughout.

Sir. J. Karslake said when the deeds were put in he did not think it necessary to read them, but he road such clauses as he thought were of importance.

The Lord Chief Justice and he thought it hardly necessary.

Mr. Harding was recalled.

A Juryman said he wished to ask a question. There were two millions of bills of the Norwich Bank discounted; 1,700,000l. you said were paid, 135,000l. not paid, and 227,000l. renewed. Could a company in liquidation renew bills?

Mr. Harding—These bills were re-discounted by the Norwich Bank at the time of the transfer of the business.

The Lord Chief Justice—And they were renewed while the business was going on?

Mr. Harding—The bills were the bills of the various parties and were renewed by them, not by Overend and Gurney. The drawers would renew the bills with the acceptors, and they were then re-discounted?

By whom?—By the Norwich Bank.

What was the ultimate result of those bills that were renewed for 227,000l., were they paid or not?—No; they were unpaid, and we had to rank against the estates of the parties.

The witness then put in the following statement of profits of Overend, Gurney, and Co., from 1851 to 1860 inclusive. In 1851 the amount of profits was 156,700l.; amount divided, 120,000l., and 37,415l. was carried to the reserve fund; the amount carried to reserve this year included 704l. 14s. 4d., part of the profit of the year 1850. In 1852 the profits were 186,386l. 11s. 10d.; the amount divided was 180,000l.; and the amount carried to reserve was 6,386l. 11s. 10d. In 1853 the profits were 212,977l. 13s. 7d. At the end of this year 219,755l. 7s. 10d. was written off in respect of loss on fraudulent metal warrants. No profit was divided that year. In 1854 the amount of profits was 153,000l.; the amount divided was 80,000l., and the amount carried to reserve was 73,500l. 7s. 8d. In 1855 the profits were 155,256l. 11s. 10d.; the amount divided was 132,000l., and the amount carried to reserve was 23,256l. 11s. 10d. In 1856 the profits were 148,617l. 15s. 7d.; the amount divided was 140,000l., and 8,617l. 15s. 7d. was carried to reserve. In 1857 the profits were 144,460l. 14s. 5d., the whole of which was carried to the reserve account, there being no division of profits that year. In 1858 the profits were 293,626l.; the amount divided was 240,000l., and 53,626l. was carried to reserve. In 1859 the profits were 442,074l., of which 360,000l. was divided and 82,074l. was carried to reserve. In 1860 the profits were 343,373l. 17s. 10d., of which 216,000l. was divided, and 127,373l. 17s. 10d. was carried to reserve.

A Juryman—What was the reserve?

Witness—To meet bad and doubtful debts.

What was the amount of the reserve?—It was exhausted in meeting bad and doubtful debts.

The Solicitor-General—There was a very large sum—348,000l.—written off at one time.

A Juryman—Were the accounts of the profit and loss arising from the speculative business kept distinct from that arising from the legitimate business?—They were not, they were merged into one.

The Juryman—Could we have a statement of the profits for three years anterior to the commencement of this speculative business?

The Lord Chief Justice—That is exactly what occurred to my mind. Conceiving that the commencement of the losses was at a later period I wanted to go back, but I am rather struck with this. This does not quite meet what I expected, because we find that as regards 1853 they sustained a considerable loss on these fraudulent metal warrants.

The Solicitor-General—That is Davidson and Gordon’s case.

The Lord Chief Justice—But still they entered upon a speculation.

Mr. Mellish—No, they had advanced money on dock warrants which turned out to be forged.

The Lord Chief Justice—If they had been taken in by forged warrants that is a different thing.

Mr. Mellish—Your lordship will recollect that the parties were tried and convicted at the Old Bailey for the forgery.

The Lord Chief Justice—With that exception there appears to have been nothing up to the year 1860 in the shape of bad debts, but in 1857 no profits were divided.

The Solicitor-General—That was the year of the panic.

The Lord Chief Justice—they carried to the reserve fund 144,460l. in 1857, but that was, as the Solicitor-General says the panic year. In 1858 they made a profit of 293,626l., and in 1859 a profit of 444,000l., and divided 360,000l., and carried 82,000l. to the reserve fund.

A Juryman—That, I imagine, was the interest of the suspense and guarantee account.

The Lord Chief Justice—They actually divided 360,000l.

The Juror—What I want to know is whether in these large sums they did not calculate the interest of these dormant accounts.

Mr. Harding said, speaking from impressions, he did not think that in the year 1860 these debts could be termed doubtful. It was subsequent to that date that they appeared to him to have accumulated into what they are now. The witness went on to state that his lordship would recollect that he was unable to reconcile the discrepancy between two statements as to the amount of withdrawals from the bank, and he intimated that he believed it arose from certain accounts not having been taken notice of by Dr. Kenealy, and which he (witness) had taken notice of, and also from a difference between the two dates. He found that Dr. Kenealy, in taking the 31st December, took an amount less than he had taken by reckoning from the 30th January, by about two millions. On the 30th January the deposit and current balances of the company were about two millions more than they were on the 30th January, and that commercial men would understand to be not an unusual thing. Then Dr. Kenealy did not include the book called the general ledger. Now, he had turned to several accounts in order to show that that ledger ought to have been regarded. On one account a deposit of 51/2 per cent. on one day’s notice, on the 31st December there was a balance of 15,000l. On the 18th of May the balance was 45l. 18s. 7d. In another account a balance of 7,554l. on the 31st December had been reduced on the 10th of May to 435l. Then there was another account, the account of a well-known Paris house, in which the balance on the 31st December, 1865, was 16,316l., which, on the 10th of May, 1866, was reduced to 13,009l. In another account the balance was reduced in the same period from 36,216l. to 14,596l.; another from 16,367l. to 2,996l.; and another from 45,471l. to 4,342l. There were a number of other accounts in which the balances had been reduced in a similar manner.

Dr. Kenealy—If these amounts were withdrawn after the 30th April they would not affect my figures.

The Lord Chief Justice—I think they would, because your figures show that within the last six months there was only a diminution of two and a half millions.

The witness stated that in another account the balance which stood on December 31 at 153,000l. was reduced on the 10th May to 71,209l. In another the balance was reduced in the same period from 89,424l. to 36,349l., and in another from 79,000l. to 118l.

The Lord Chief Justice—Therefore, it stands that as between the 31st Dec. And the 10th May, instead of only 21/2 millions being drawn out if you take the accounts in the general ledger there was a much larger sum drawn out.

Witness—Yes.

The Solicitor-General—You have looked into the book of statistics, and as far as you can judge is it to be depended upon?

Witness—That book came into my hands with the others in the liquidation, and I have no reason to doubt its accuracy.

At the request of Dr. Kenealy a marginal abstract of the deed relating to the Norwich Bank, dated the 23rd of April, 1866, was read by the associate. One or two clauses, or portions of clauses, were read in full.

While the court was waiting for formal proof of another document.

The Lord Chief Justice requested Mr. Mellish to address the court, as he had expressed a wish to do, on behalf of Mr. Barclay.

Mr. Mellish said he had to submit that there was no evidence which ought to be left to the jury as against Mr. Barclay. The first six counts in the indictment were not counts for a conspiracy at all, but counts upon the statute 24 and 25 Vict., ch. 96, sec. 84. That statute said, “Whosoever, being a director, manager, or public officer of any body corporate, or public company, shall make, circulate, or publish, or concur in making, circulating, or publishing, any written statement or account which he shall know to be false in any material particular, with intent to deceive or defraud,” &c., “shall be guilty of a misdemeanour.” There was also a provision that no person should be liable to be convicted in consequence of anything which he might himself have disclosed in any process of law or equity. He was not going to rely upon this last provision, as Mr. Barclay had not disclosed anything in that way; but it partly explained why the prosecution had added a number of counts, apparently with the view of treating the actual committal of a certain act as an overt act of conspiracy. Eleven counts—6 to 17—were counts of that description, and they all treated the issuing of the prospectus as the substance and essence of the office. The 18th count charged that the defendants conspired together, by divers false pretences, and by divers artful and subtle means and devices, to obtain and acquire for themselves the money of one Adam Thom, and to cheat and defraud the said Adam Thom. This count did not specify what the false pretences and the artful and subtle means were. It was a count for defrauding, not all persons who might belong to the company, but a particular individual. Now he submitted that that count could not be sustained.

The Lord Chief Justice said it struck him that if the conspiracy were once established, although at the outset it was not intended to defraud any particular individual, yet it must be regarded as a containing conspiracy; and if the object were accomplished, it was in the result a conspiracy to defraud particular individuals.

Mr. Mellish said, however that might be, he should contend that the only thing which could be said to have been done to induce the public or anybody else to subscribe was the issuing of the prospectus.

The Lord Chief Justice said there might be a conspiracy to defraud, the accomplishment of which was to be effected by the issuing of the prospectus. If the jury should come to the conclusion—he did not mean to express any opinion on the point—that the concern was a thoroughly rotten one, and that the parties must have known that, and determined to get rid of their interest and induce the public to take it, although it might be that one of defendants had nothing on earth to do with the publishing of the prospectus, yet if he concurred in the antecedent conspiracy, what was done for the common purpose must be taken to have been done by all the parties.

Mr. Mellish said the counts for conspiracy were so general and so vague, that it was almost impossible to distinguish what was sufficient evidence in point of law to prove that an individual was a party to it. For instance, his learned friend (Dr. Kenealy) said in his opening that Mr. Barclay was a cousin of one of the Messrs. Gurney and a brother-in-law of another. Was that a kind of evidence which could be accepted in a court of law? What he (Mr. Mellish) wished to show was, that as regarded Mr. Barclay there was not sufficient evidence for it to be left to the jury to say whether he was a party to the conspiracy, supposing one to have existed.

The Lord Chief Justice said, supposing the jury should think that every one of the defendants must have known that the concern could only end in ruin, a very strong conclusion so far as Mr. Barclay was concerned, seeing that he made himself liable for 50,000l., the present objection could not be sustained.

Mr. Mellish said he contended, on the part of Mr. Barclay, first, that there was no evidence in point of law that he was a party to the prospectus: and secondly, that there was no evidence in point of law that he had any such knowledge of the state of affairs in the old company as could possible make him guilty if he were a party to it. There was no evidence that he had any knowledge of the state of affairs until he became a director, on the 8th of August. After citing the letters from Mr. Daniel Gurney to Mr. John Henry Gurney, and referring to the third deed which was prepared at the request of Mr. Barclay, the learned counsel went on to argue that it was quite clear from the evidence and the dates that the defendant took no part in the discussions about the prospectus; that he was not an original director, and was not intended to be one; and that the prospectus had been settled, the instructions given for the deeds, and the whole mode of carrying out the scheme had been arranged before he became a director. At the time, he said, when Mr. Barclay was asked to become a director he was very much interested in the laying of the Atlantic Cable, and was about to go to Ireland in the Great Eastern to see the commencement of the work. No doubt some communication had taken place between him and the other directors, but there was no evidence as to what induced him to promise that he would be a director. He took 1,000 shares. Thereupon, on the 23rd of July, the day on which the company was formed, he signed the memorandum of the articles of association; immediately after he went away in a hurry in the Great Eastern; and, except that he consented to become a director, he was in exactly the same position as any other shareholder. The prospectus was issued by the promoters of the company, and his (Mr. Mellish’s) defence of Mr. Barday was, in substance, that though he had consented to become a director, he never was in any sense a director before August.

The Lord Chief Justice observed that Mr. Barclay agreed to become a director before the prospectus was issued to the public.

Mr. Mellish said his lordship would recollect that in a case in which an action was recently brought in that court against Sir Edward Watkin, on the ground that he was a party to the issuing of a fraudulent prospectus, when the defendant had stated in his evidence that the first saw the prospectus in which he was announced as chairman of the company at the Great Western Railway board, and that he at once wrote a letter to the promoters, saying, “Your prospectus is too florid,” although he afterwards acted as director, and even as chairman, the jury at once stopped the case, and said there was no evidence against him. In the present case there was no evidence that Mr. Barclay ever saw the prospectus before it was issued.

The Lord Chief Justice said it was not for the Judge to assume that a person who became a director of a company formed to carry out, as was alleged, a scheme involving fraud, was not cognisant of that fraud.

Mr. Mellish said Mr. Barclay did not intend to impute to Mr. John Henry Gurney, Mr. Birkbeck, or any other member of the old firm, that they contemplated fraud; he would rather be convicted than make such an imputation. It had, however, not been proved that Mr. Barclay ever even went to the offices of the old firm before the prospectus was issued.

The Lord Chief Justice said if it appeared that Mr. Barclay simply consented to be a director, and when the documents were laid before him signed them without any knowledge of the facts, the jury ought, without hesitation, to dismiss the case as a against him; but at present there was nothing to show that he never went to the offices, or that he undertook to subscribe for 1,000 shares without having any knowledge of the state of affairs.

Mr. Mellish said neither Mr. Jones nor Mr. Slater appeared to have seen him at the office.

The Lord Chief Justice thought he was not justified in assuming that he did not go there, or that he held no communication with the partners through which he became acquainted with the pecuniary state of affairs. The question was one not for him, but for the jury to determine.

Mr. Mellish said his lordship knew how difficult it was in such a case to get the jury to attend to a minor point like that.

The Lord Chief Justice hoped it would not be difficult in that case.

His Lordship then consented, at the request of Mr. Mellish, to reserve the point with regard to Mr. Barclay in case the jury should return a verdict of “Guilty” against the defendants.

Dr. Kenealy said his learned friend Mr. Moir had gone through the draft of the private deed, and had found an extraordinary number of erasures and alterations, and as he intended to make some comments on the appearance of the draft, he proposed that it should be seen by the jury.

The Solicitor-General submitted that if any observations were to be made as to the appearance of the draft Mr. Jones should be asked what he had to state about it.

The Lord Chief Justice—We have had it, that great alterations were made in the second deed by Mr. Fooks on behalf of Messrs. Gordon and Rennie.

The Solicitor-General—There were a great many meetings, Mr. Jones says, upon it.

The Lord Chief Justice—I do not wish to anticipate any observations that I have to make, but I must say that the alterations made by Mr. Fooks go far to satisfy me that he, as counsel for Messrs. Gordon and Rennie, was extremely vigilant to watch over their interests as distinguished from the interests of the members of the old firm.

After some further discussion on this point, in which Sir. J. Karslake, the Solicitor-General, and The Lord Chief Justice all spoke of its being a common thing for drafts to be altered and re-altered so that hardly a word of the original was left, when it was finally settled and approved.

Mr. Jones was recalled and examined by Mr. Moir—He spoke to alterations respecting the financial assistance to be given by the new company in reference to the suspense guarantee account being made by Mr. Braithwaite and struck out by Mr. Fooks, and alterations suggested by Mr. Fooks being amended by Mr. Braithwaite, which amendments were again struck out by Mr. Fooks, and so on with other alterations. There was no schedule to the draft, but it must have been there some time.

The Lord Chief Justice—I will ask you this general question—Did these two gentlemen discuss the various provisions of this deed as it affected the interests of the old firm and the interests of the in-coming new directors as a common interest, or as an antagonistic interest?

Witness—I should say as an antagonistic interest. Mr. Fooks was settling the draft on the part of the new directors, whereas Mr. Braithwaite had prepared the draft on behalf of the vendors.

And Mr. Fooks was acting in the interest of the vendees?—Not the slightest doubt of it.

By Dr. Kenealy—The first sheet had been copied by a law stationer. Almost every word of Mr. Braithwaite’s had been struck out. It was the ordinary practice for the schedule to be added by the attorney and not by the counsel. Mr. Fooks must have seen the schedule, because the engrossed draft was signed and approved of by both counsel. That was not the draft.

Dr. Kenealy—I want the draft signed by Mr. Fooks?—Here it is, this is the draft of the first deed.

Dr. Kenealy—I do not want the draft of the first deed. We are satisfied about the draft of the first deed. I want the draft of the second deed.

Witness—They are both signed on the basis of a contemporaneous indenture. Yes, this is the schedule, there it is at the foot.

The Lord Chief Justice—Is that the finally settled draft?—That is the finally settled draft.

The Solicitor-General—There are several alterations even in it?—Even at the last moment.

Even in the schedule?—Yes.

Dr. Kenealy—They are both settled and approved on the same day—the 11th of July.

Witness—That is not the actual date of the signature.

The Lord Chief Justice—How comes that?

Witness—For this reason, that as they were signing they suggested that as the post deed should be dated on the 11th of July, and as they were supposed to be contemporaneous deeds, both approvals should be on the same day. I now see that they were engrossed by my stationer on the 25th of July, the two deeds. I had them engrossed as soon as I could obtain them from counsel.

Dr. Kenealy then summed up the case for the prosecution. He said he had to congratulate the jury on the approaching completion of this trial. He had no doubt they all felt very much how great and solemn a responsibility rested upon them, not simply the responsibility which, as men of honour and morality they owed to their own consciences, but the responsibility which they all owed to the general public. Although this case was remarkable for the magnitude of the interest involved, and also for the position which the defendants had occupied to the present time, it was to be dealt with exactly on the same principle of law as that which was applied to the miserable case of a mock auction at Quarter Sessions. Indeed, it seemed to him that this case was analogous to that of a mock auction. There the parties put up for sale false and fictitious articles, which they pretended were genuine. By flaming advertisements and by placards at the door they induced unsuspecting countrymen and silly Londoners, if there were such persons, to purchase, and it was not until the articles were afterwards shown to some experienced person that the purchaser found that instead of a diamond ring, which he supposed he had bought, and a golden ornament, he had got a bit of glass and an article made of brass. This was exactly the case here. The defendants professed to sell as valuable that which they knew was worthless; they promised to assign as solvent that which they knew to be insolvent; and by promises of this nature they induced a great number of persons to part with their hard-earned and honest money; and the persons who had been so defrauded of their money, having discovered, as in the instance of the countryman who had bought a piece of glass when he thought he had been buying a diamond ring, and an article made of brass when he thought he had been buying gold, now complained that the prospectus by which they were induced to part with their money was absolutely false, and they were as much entitled to redress as if they had been deluded at a mock auction. He was going to put before them a plain issue. Was his concern insolvent with the knowledge of the defendants at the time that they professed it was solvent? If they found that it was insolvent it was their duty to hind the defendants guilty. He was extremely glad that they had had the evidence of Mr. Jones in this case. His learned friend, no doubt, thought that Mr. Jones had done great injury to the prosecution. He took an entirely different view. He considered the evidence of Mr. Jones as damnatory to the whole case of the defence. He did not wish to cast any imputations of wilful and deliberate falsehood on Mr. Jones. He made every allowance for Mr. Jones’s position as having been for years employed by the defendants as their solicitor. During that time he must have lived in the most intimate relations with them and have conceived a friendship and affection for them, and he must have received vast sums of money from them in the course of his employment. All these things would naturally give to his mind a bias. And then it was to be remembered that the things he spoke to happened so long ago as 1865. He put it to the jury whether there was not something suspicious in the meetings at which it was determined to bring out the new company being held in St. James’s-square. Instead of carrying on their consultations in Lombard-street, or at the office of their solicitor, the private residence of one of the members of the old firm was selected, so that no observation would be  attracted to what was there going on. The object of the meeting was to discuss the propriety of transferring the business of Overend and Gurney to some new company to be formed. If it were merely to discuss the financial position of the firm, and the mode in which a prospectus was to be framed they did not require the presence of a lawyer. The first meeting lasted for more than two hours, but did Mr. Jones give them any idea of what was done? All that he really told them was that some figures were mentioned, and that there was a vague idea that there was to be a considerable surplus. Mr. Jones thought that somebody said there would be a surplus of 800,000l. Credat Judaeus apella. It was clear that legal matters were under discussion.

The Lord Chief Justice—I do not think that you asked him the question.

Dr. Kenealy—I asked him to state accurately what took place.

The Lord Chief Justice—You did not ask whether any legal matters were discussed, because I was struck with that.

Dr. Kenealy—Mr. Jones stated that the matter discussed was principally the question of the prospectus.

The Lord Chief Justice—As I understood, the surplus and the prospectus were the subjects under discussion, and incidentally one of the members of the old firm mentioned the surplus that was calculated. Beyond that nothing was asked of him as to whether there was any discussion of a special character.

Dr. Kenealy, resuming his address to the jury, said a transfer of a business of this kind was one of the simplest things that could be done if it were an honest transaction; but if it were dishonest the greatest caution was required to shelter the parties from the criminal law, and the presence of their legal adviser was necessary. Well, the first meeting terminated, and one would have supposed that the matters that could come under discussion would have terminated there. But not so. Another meeting was held in the same place, a long meeting, at which there was another discussion, and at which the prospectus, he presumed, was finally settled. Then Mr. Jones was told in perfect innocence to do all that was necessary as a lawyer. There were millions to be transferred, and he should have thought the magnitude of the transactions was such that the instructions would be in writing. But they were oral. Now, as a rule, the bona fides of a transaction might be judged of by the fact whether written or verbal instructions were given. If there was anything dark and to be concealed, of course no one would be foolish enough to put the instructions in writing. What was said passed away; or if it were preserved at all, it was only in frail memory; but litera scripta manet. There it was, and it might be brought up in judgment at any time. He now came to the instructions given to Mr. Braithwaite as to the preparation of the deeds. It was clear that either what was intended was not them communicated to Mr. Braithwaite, or that Mr. Braithwaite did not fully understand it. He was described as an eminent conveyancer; and one would have thought that if it were a bona fide transaction the whole business could have been made clear to the mind of Mr. Braithwaite without any difficulty. But that appeared not to have been so, because there were other interviews—interviews when Mr. John Henry Gurney saw Mr. Braithwaite in company with Mr. Jones, and interviews when he saw him alone; and whether the whole of this design was communicated to Mr. Braithwaite, or whether Mr. Braithwaite, without being actually let behind the scenes, was merely instructed to prepare so and so, was a matter that would probably never be known. That Mr. Braithwaite was entitled to the fullest and most perfect confidence of the Gurneys was apparent from the passage in the deed relative to the partnership in Norwich Bank, which provided that he should be one of the arbitrators in case of any dispute. He was justified, therefore, without casting any imputations on Mr. Braithwaite, in saying that he would not be at all inclined to suspect that there was any darkness in this transaction, and that he was not at all likely to put questions to them which would be of a hostile nature. Everything was done that was likely to put a man like Mr. Braithwaite off his guard, so that he would not enter into the matter with that suspicion which, if the parties had been utter strangers to him, would have been excited. Mr. Jones said he gave Mr. Braithwaite instructions to prepare the deed or deeds for the transfer of the business. Did not that show that it was in contemplation that there should be two deeds. They had heard a very ingenious explanation which Mr. Jones gave. Mr. Jones would not be a member of a legal firm employed by Messrs. Overend and Gurney if he were not a man of great ingenuity and skill. Mr. Jones said only one deed was mentioned in the prospectus, because it was necessary to get out the prospectus at once, there being then a prospect of a general election, and he did not know that there would be more than one deed. But where was the necessity of hurrying on the prospectus? The number of shares applied for showed that instead of the company being brought out, as Mr. Harding stated, at an unfavourable time, the case was the reverse. 224,484 shares were asked for, and only 83,000 could be allotted.

The Lord Chief Justice said he understood Mr. Harding to allude to what happened after the company was brought out.

The Solicitor-General said Mr. Harding referred to the state of the money market.

Dr. Kenealy said he must ask the jury to consider whether the real reason for all these interviews was not to be found in the conviction of some of the defendants as to the position of the concern. He conceded that there was a remarkable distinction between the members of the old firm and the directors who joined the new company. It would be absurd to suppose that the Messrs. Gurney and Mr. Birkbeck ever communicated to the new directors their exact financial position. But, on the other hand, it seemed improbable that London merchants and men of business had no knowledge of the position of the old company when they consented to share the destinies of the new one. The transactions connected with the second deed threw a ray of light upon the matter. The knowledge of the two deeds from the commencement was brought home to the whole of the directors; and if any of them had no knowledge whatever of what was in contemplation, would they have allowed it to be held forth to the world that there was only one deed. The Stock Exchange required all documents to be laid before it. Could any man of honour say that its requirements were met when a deed of such importance as the second one was kept back? The suppressio veri looked in this case like the suggestio falsi. The fact that nothing was said about a second deed afforded ground for the suspicion that the defendants knew that everything was false and hollow. The whole purport of Mr. Jones’s evidence with regard to the early meetings of the directors was, that the burden of the song there was that there was a large available surplus. He (Dr. Kenealy) must say that either that must be a delusion in the mind of Mr. Jones or the Messrs. Gurney must have wilfully and wickedly deceived the other directors. The correspondence between old Mr. Gurney, of Norwich, and Mr. J. H. Gurney, furnished the most conclusive evidence that the Gurney family knew perfectly well that they were at that time in a state of utter ruin. On the 25th of May the former wrote to the latter:—“My dear J. H.,—It appears to me you have done quite the right thing in negativing the proposal of continuing the Overend, Gurney, and Company business.” From this it was clear that such a proposal had been made, but this gentleman thought that to act upon it would be only adding ruin to ruin. The nephew had taken the advice of his uncle—one of those cautious men who had established the reputation of the bank by fair legitimate dealing, not by extravagant dreams and speculations. Well would it have been if besides this negativing of the proposal to continue the old concern the partners had revealed their position manfully to the world, and left the creditors to take the 10s. in the pound which Mr. Harding thought would have been available, every one would then have respected them, and been sorry for them. Mr. Daniel Gurney went on to express a hope that nothing would occur “to frustrate the negotiations with the National Discount Company.” Mr. Jones said he never heard of such negotiations, but could any one doubt, after what he had read, that there were negotiations? On the 24th of June his uncle wrote, “My dear J. H.—Your two letters received this morning. I am sincerely pleased that everything is in good train for the formation of the new company, and I trust that all will go well in starting, and that you will find a fourth desirable director.” This was written four days after the interview in St. James’s-square. “I certainly feel a very great objection to our joint and several guarantee for the deficiency.” What deficiency? According to Mr. Jones there was a magnificent surplus of about 700,000l.

The Lord Chief Justice observed that that surplus was dependent on the whole of the private property of the Gurneys being sacrificed.

Dr. Kenealy continued—Mr. Daniel Gurney wrote that he had great objection to the marriage settlements being placed after the requirements of the liquidation fund. In the next letter he said he acceded to the giving of security, but added, “You must bear in mind that in case of a real catastrophe all my family and myself would be in total destitution.” Those words “a real catastrophe” must convince the jury that at that time it was perfectly well known to all the members of the Gurney family that the bank was not solvent—that a catastrophe was impending, and that it could only be averted by some such device as was resorted to. He must here remark that a most singular document had been presented to the court that day. The jury had been told all along that the cause of the silence about the second deed was, that it was not ready. A document was produced in the handwriting of Mr. Fooks, an eminent member of the bar, which purported to have been signed by him on the 11th of July. They were now asked to believe on the evidence of Mr. Jones that that date was untrue—wilfully untrue. Sixteen pages of the draft of the second deed were missing. Mr. Jones’s explanation was that the draft was cut up at counsel’s office; but it seemed most remarkable that there should be such a series of mishaps with regard to the second deed, while there was no suspicion about the first. From what was done in St. James’s-square he passed on to consider the real position of the firm of Overend and Gurney at that period. Their position was most lamentable. They had on their books a series of debts amounting in all to 4,213,000l., for which they could not expect to receive, under the most favourable circumstances, more than million, which, in the result, realised only about half that sum. That was an immense amount to have as a deed loss upon the concern; and what added to their misery was the reckless way in which they had acted a short time before. In 1858 they divided as profit 240,000l.; in 1859, 360,000l.; in 1860, 216,000l. In 1861 they seemed to have opened their eyes to what they had been doing, and in that year they divided only 3,600l. The way in which this matter was put by Mr. Harding was, that having been in such flourishing circumstances, and divided so much money, they were perfectly justified in disposing of their business in the manner they did. On the other hand, he (Dr. Kenealy) contended that when those large profits were divided they knew what was hanging over their heads.

The Lord Chief Justice said that was just the point at issue. Mr. Harding said it was not till after that time that the doubtful assets became doubtful.

The Solicitor-General protested against its being assumed in a criminal prosecution like that that Mr. Harding’s statement was open to exception. It was perfectly competent to Dr. Kenealy to have gone into details to show that those debts began to be oppressive at an earlier period.

Dr. Kenealy thought the dates had been given. The debt of the Atlantic Royal Mail commenced years before. Long prior to the transfer it must have been discovered that a large proportion of the 4,213,000l. was valueless. From the prospectus it would naturally be inferred that they were offering to the public something of great value, whereas of the 15,000,000l. of assets nearly one-third was not realisable. They said that the terms of the transfer could not fail to insure a highly favourable return to the shareholders. If they believed that they ought to be acquitted, if they disbelieved it they ought to be convicted. They said that they would give their zealous attention to “the cultivation of business of a first-class character only.” That was a promise. Did they intend to fulfil it? They bound themselves by a separate deed to advance money on account of an old deficiency. Had the public known that fact, would they have applied for shares? As to the 7 per cent. dividend which the shareholders were led to expect, how was it possible that it could be realised? An utterly illusive idea was also conveyed by the provision in the deed that the directors were to be at liberty to acquire “any other business of like character which they may hereafter think it expedient to acquire for the benefit of the company.” Among the fish that flowed into this net was Dr. Thom; and Dr. Thom, after having lost his 2,400l., went to a meeting of the shareholders, at which the whole or the greater number of the directors were present, and he asked a question three times, and it would be for the jury to say whether the answer was satisfactory. It was made an article of accusation against Dr. Thom, that having promised to produce answers and affidavits made in Chancery, he refused to do so. Now he (Dr. Kenealy) offered to put those documents in, but he refused, and considered he was justified in refusing to put them in, unless he reserved his right to comment on them. The learned counsel then referred to the correspondence between Mr. Peek, who had lost 95,000l. by this company, and Mr. Birkbeck. Mr. Peek being a very large shareholder, and hearing some adverse rumours, wrote to Mr. Birkbeck, who replied that they had not made a single bad debt, and that when the time came for bringing the affairs of the company before the shareholders Mr. Peek would be perfectly satisfied. He also referred to the interview between Mr. Peek and Mr. Birkbeck on the 10th of May, when they were putting up the shutters of the bank. Mr. Peek asked why it was, and Mr. Birkbeck said the Bank of England had refused them assistance, though they offered them good security, and that they had refused because there was an old grudge, and that he sat down at a table and laid his head upon it and said, “I wish you would accuse me, it would relieve my mind.” to which Mr. Peek replied, “If everything has been honest I do not see any reason to accuse you.” He (Dr. Kenealy) hoped that the real meaning and spirit of that interview might be regarded in this light, that Mr. Birkbeck’s conscience smote him when he saw the man who had lost that vast sum of money. He hoped that it was a moment of repentence, and that it would not fail to operate on his mind at a future time. But if Mr. Birkbeck had been an innocent party to this transaction he could not imagine how he could have made such a remark. Mr. Peek went again the next day, and saw Mr. Gibb, one of the directors, who said they had prepared an account showing that they were in a position to pay a dividend of 7 per cent. If that statement were true, why had no such account been presented to the court? He now came to Mr. Howell, who he thought had been hardly dealt with in this case. Mr. Howell came there simply as an accountant, and although Mr. Harding was called after Mr. Howell, he failed to show that Mr. Howell was wrong in any of his calculations, nor did Mr. Turquand, who gave his evidence very independently, point out any error in them. Mr. Howell showed that the new company started with a debt of 2,970,000l. Now, was that ever contemplated by the shareholders of the new company? Was it ever dreamed of by those who subscribed their money that they were doing so, not to promote their own interests, but the interests of old firm of Overend, Gurney, and Co.? But the debts of the old company swallowed up the whole of the money subscribed by the new. Mr. Howell said the real profit of this unfortunate company during the ten months of its existence was only 4,500l.

The Lord Chief Justice—I cannot understand how they could discount bills to the amount of 56 millions without making a greater profit than that, unless some heavy losses are to be deducted. Mr. Harding, were there any losses?

Mr. Harding—Mr. Howell deducts from the balance of interest 130,000l. which had been charged against the suspense and guarantee account.

The Lord Chief Justice—But that ought not to have been charged.

Mr. Harding—The company were paying interest to those who had money there, and if they were not to charge interest to the suspense and guarantee account, they were paying interest, and not receiving.

Dr. Kenealy cited several of the clauses of the first deed, and contended that much of what he read was calculated to mislead. The old debts were, he observed, disposed of in a parenthesis, as if they were of no importance; and no one could guess from that deed what was their real nature, or what was contemplated with regard to them. The term “obligatory” was used in speaking of them in connection with what the old directors were to do, as if some advantage were being offered to the shareholders with regard to 4,000,000l. which was locked up. He then referred to various clauses in the second deed. Clause 13 was, he remarked, a very singular one. The business of the old firm being represented to be in a most flourishing condition, it was there provided that any sums of money which the new company should advance to Overend, Gurney and Company for the purpose of enabling them to close their accounts should be repaid by the vendors within two months. The inference from that was that the old firm was in such a state of insolvency and ruin that they were unable to get in their outstanding accounts without borrowing money from the new company. A sight of that clause would at once have manifested to the public the insolvency of the concern. He hoped that the jury would, when they came to deliberate, look at the schedule of old debts, and see what kind of things were included in it. There was a third deed, which he had put in for the purpose of showing that Mr. Barclay had a guilty knowledge of the second deed. Mr. Barclay had a guilty knowledge of the second deed. Mr. Barclay had been represented as a person who was entirely ignorant of the past transactions, and who was misled by his opinion of the Messrs. Gurney; but the third deed reciting the conditions on which he consented to become a director was quite inconsistent with that supposition. He would now refer to the evidence given by Mr. Harding on the fourth day of the hearing. Mr. Harding came before the court in what appeared to be a perfectly impartial character, being the official liquidator of the company. He had, however, had some previous transactions with the Messrs. Gurney, which were not unprofitable to him, and in his capacity of official liquidator would receive upwards of 20,000l., and no doubt the jury would bear those facts in mind, and ask themselves whether he could be regarded as an impartial witness. Long association and interest naturally biassed the mind of Mr. Harding, as they did that of Mr. Jones. The tenor of Mr. Harding’s evidence was that the Messrs. Gurney had been making large fortunes for a long series of years; that their money dealings were most colossal, being reckoned by hundreds of millions; and that if they formed erroneous ideas of their position on the 31st of July, 1865, that was very excusable, because they did not regard millions as ordinary mortals viewed them. That was, he thought, a fair representation of Mr. Harding’s theory, and he hoped the jury would not be misled by the brilliant flashing of that gentleman’s figures. Probably through his contemplation of millions, Mr. Harding had brought himself to believe that Messrs. Gurney believed their views to be well founded. He (Dr. Kenealy) was not much versed in figures himself, nor, he thought, were the members of the bar generally versed in figures.

The Lord Chief Justice—Except figures of speech. (Laughter.)

Dr. Kenealy continued—Mr. Harding had singularly exemplified the old adage that you might prove almost anything by figures. He stated that in the first four months of 1866 deposits were drawn out of the bank at the rate of a million a month. He afterwards attempted to modify that statement; but the impression which he conveyed was that such was the rate of withdrawal during that period, and the jury was left to infer that it was not possible for the new company to stand such a drain. Mr. Harding derived that information from a book called an “Abstract,” which came into his possession in a manner that he did not explain. He said that he got it with the other books; but it was an unfortunate fact that he had been in constant communication with Mr. Boys, and if it had happened that Mr. Boys accidentally left that book in the office Mr. Boys would find it there. He did not say exactly how it was delivered to him.

The Lord Chief Justice—He said it came to him amongst the other books of the company.

Dr. Kenealy said it seemed very odd that that book should have been abstracted, and still more singular that it should differ from the general ledger. According to the general ledger the total amount drawn out in the first four months of 1866 was 1,475,157l., being an average of 368,789l. It would be for the jury to ask themselves whether the abstract which he had mentioned was made with the intention of conveying the truth. If it were made in order to convey an erroneous impression that was a thing to be strongly condemned.

The Lord Chief Justice—You ask the jury to draw the inference that that book is a fictitious one?

Dr. Kenealy—I ask them not to place the same reliance upon it as upon the general ledger of the company. According to the general ledger the amount withdrawn in the first four months of 1866 was 1,475,257l., while the amount withdrawn in the last ten days was 1,014,000l., the aggregate being considerably less than 3,000,000l.

The Lord Chief Justice, after expressing a hope that the case would be concluded on Tuesday (to-morrow) asked Dr. Kenealy how much longer he would take to finish his remarks.

Dr. Kenealy thought he would be able to conclude in an hour and a half, or at the outside in two hours.

The Court then adjourned at twenty minutes to five, till a quarter past ten this morning.

The Daily News. Nr. 7377, 22. Dezember 1869. S. 2. THE OVEREND, GURNEY, AND CO. PROSECUTION.

Dec 22

This trial was resumed at the Court of Queenʼs Bench, Guildhall, yesterday morning. The Lord Chief Justice took his seat on the bench at a quarter-past ten.

The Solicitor-General resumed his address. He said he yesterday omitted to notice the allegation that there were no balance-sheets. Mr. Howell said he asked for balance-sheets, but could not get any, and yet in cross-examination he admitted that the documents before him, and which had been shown to him by Mr. Boys, were balance-sheets. The balance-sheets of the old firm were kept simply for the purposes of the old firm, and were not such as might be proper to be shown to a public company, but they were balance-sheets. Then as to the estimate of the private estates, Dr. Kenealy said they yielded only 730,000l., but it was in evidence that during the trading of the company 529,000l. was received on account of the  private estates, which was in addition to the 700,000l.

The Lord Chief Justice, said but that was to make up a deficit on the other side.

The Solicitor-General—Yes, but the observation was relevant, as showing that the estimate was not put too high. He would now go to the excepted accounts. No doubt they were the thing that had broken up the company, and therefore he was not going to contend that the trading capital of the company was not locked up. But what he was going to show was, that his learned friend entirely misrepresented the nature of some of these accounts, and as to the others, that there were securities. His learned friend described the excepted accounts as rotten accounts, and being therefore adhered to throughout. Then he spoke of them always as “transferred as cash,” and he mentioned the items, item by item, as “transferred as cash,” and this though he had the deeds before him in which they were dealt with as locked up advances, and he knew that they were treated in the deeds as of the value of only 1,080,000l. The prosecution knew perfectly well that the excepted accounts were dealt with as worth only 5s. in the pound; and not only were they not transferred as cash, but they were not transferred at all, and were never intended to be transferred.

Mr. Moir remarked that the account was headed—“cash suspense account.”

The Lord Chief Justice—I felt the impropriety of the term and the endeavour to raise a prejudice by speaking of the excepted accounts as “transferred in cash,” and I made a strong note in my paper, intending to call the attention of the jury to that matter.

The Solicitor-General said he was obliged to his learned friend for the interruption. Did he mean to say that that entry in the book justified him in asserting that these debts were transferred as cash? Let them look at two or three of the excepted accounts. One was that of Kelson, Tritton, and Co., 291,000l. Possibly it would have been better if the defendants had caused the members of that firm to have been tried at the Old Bailey for the fraud they committed in obtaining money on fictitious bills of lading. As his lordship observed, those duplicate bills of lading, though not valued so far as to enable them to obtain the goods to which they referred, were good as against the estate of Kelson, Tritton, and Co. The defendants did their best to minimise their loss, and his learned friend endeavoured to prejudice the case by asking if the defendants had any further dealings with them. Then there was the account of Mr. Koch. His learned friend spoke of it as entirely fictitious and fraudulent, and as an absolute fabrication. At the close of the case Mr. Koch, who was supposed to be hostile to the defendants, was reluctantly called, and he said he was surprised at first to see his name among the list of debtors, but now he was satisfied that it was a mere matter of book-keeping; that he was the agent through whom the defendants made advances to various railway contractors and others, and that as against their advances they had in 1865 securities of the nominal value of 600,000l., which at that time were worth 90 per cent. of their nominal value, though in consequence of the general depreciation of that kind of property they were not worth near as much now. Most offensive imputations were made against Mr. John Henry Gurney in reference to the Ebbw Vale shares, but there had not been even an attempt to prove that those imputations were well-founded. Then there were the advances to the East India and London Shipping Company and the Atlantic Royal Mail Steam Packet Company. Overend and Gurney were second mortgagees of certain valuable ships, and they were compelled to make further advances for the purpose of getting the securities into their hands. They did so, and in some cases got considerable sums of money thereby. In others they did not. With regard to the Atlantic Royal Mail Steam Packet Company, when the Galway contract was in existence the company was a flourishing concern, and Overend, Gurney, and Co. might well suppose that they were advancing money on good security. With regard to the guarantee, which after all was the material question in this case, not only was it believed to be sufficient, but it was proved to have been sufficient by two most competent men, Mr. Turquand and Mr. Harding. Then as to the deeds, he submitted that everything showed the bona fides of the defendants, and Mr. Jones had sufficiently explained why there were two deeds, and why he only sent one to the Stock Exchange. Their conduct throughout had been the conduct of honourable men. They embarked their whole substance in the company; they stayed by the concern to the end. They could not gain a shilling; they could not relieve themselves from a shilling unless the working of the company was successful. Therefore they had the deepest interest in the success of the company. They had been, as had many other people, victims of circumstances over which they had no control. The company came out at an unfortunate time, when money was 3½ per cent., and the rate rose gradually till it became 8 per cent., by which they lost large sums. Then the fact that they were selling their private estates becoming known must have prejudiced them, and the failure of the company brought down the value of their property, and made the realisation of their assets a hundredfold more difficult. He now left the case in their hands. They might be told that this was an issue in which millions depended. Like many other statements of his learned friend, it was absolutely inaccurate. There were no millions dependent on this issue. Not a shillingʼs worth of money depended on it. Not a farthing could be extracted but what had been extracted from Messrs. Gurney and Mr. Birkbeck. As far as they were concerned they were ruined men. The world could do no worse to them than it had done already. But there was an issue, an issue of another kind, of the deepest and most painful interest, in their hands, and that was the honour and happiness and peace of mind of these gentlemen and their families for the rest of their lives. He had not made, and he did not intend at the end of his address to make any appeal to their feelings, and he would make no attempt to rival or to imitate the peroration of his learned friend. He would not follow his learned friend in his references to Lucius Junius Brutus, and Virgil, and Marcellus, and the South Sea Bubble, and the expectation of this country and of America. His learned friend talked of their having the courage to convict the defendants. Now he ventured to say that there was not much courage in bearing down gentleman who were already borne down. The real courage would be to stand up between prejudice and its victims, to set at nought popular prejudice and its clamour, and to do right simply because it was right. If he were disposed to quote on this occasion he would quote from a greater than Virgil, and from a juster than Brutus, from Him who said, “Whatever ye would that men should do, do ye so even unto them.” He would ask the jury to judge these gentlemen as they would like to be judged themselves. He was sure they would do so, and he left the case with confidence in their hands. (Much applause from the gallery.)

The Lord Chief Justice—If that is repeated I will clear that part of the court. That practice of applauding is a practice that has grown up; it was not known in my younger days, and what I am not going to allow. It is converting a court of justice into an arena, and is very wrong. If it is done again I shall clear the gallery. I do not wonder that so fine a speech should call forth an emotion of the kind, but it must be manifested here.

Mr. Mellish then addressed the jury on behalf of Mr. Barclay. He said he had not to go into the general question whether the prospectus was fraudulent, or whether there was a conspiracy to defraud, for as far as the charge of conspiracy was concerned, he was perfectly satisfied with what the Solicitor-General had brought before them. Of course, if his learned friend showed that Messrs. Gurney and Mr. Birkbeck were innocent, and should be acquitted, Mr. Barclay must be acquitted also. The whole case as against Mr. Barclay turned on this—what was his intention when he became a director of this company, and invited others to joint it? Did he believe that the old firm was insolvent, and that the new one would be a rotten concern, or did he believe that the new company, subject of course to the ordinary risks which all banking companies ran, would be a beneficial company to the shareholders? When Mr. Barclay became a director of the company he was entirely unconnected in business with the old firm. He had been in business in his early days, and had made a fortune, but at the time that this company was formed the only business that he had was that of director of the Telegraph Construction and Maintenance Company. He lived in Essex, coming up to London from time to time. It was perfectly true that he was a brother-in-law of one, and a cousin of another of the members of the old firm, but did that prove that he was guilty of fraud? If there were a scheme of roguery the Messrs. Gurney and Mr. Birkbeck must have gone to Mr. Barclay and said, “We are going to act as rogues, will you join us?” Could any one conceive such an invitation being addressed to a person who could not benefit to the extent of a farthing by what was contemplated? That Mr. Barclay did not become a director till shortly before the new company was registered was clear from the evidence of Mr. Jones, and also from the letter of Mr. D. Gurney to Mr. J. H. Gurney, dated the 24th of June, 1865, where he spoke about the old partners seeking a fourth director. In that letter mention was made of a Baring or Sir John Hay as a possible director. Would such persons have been dreamt of in connexion with a scheme of fraud? The old firm clearly wished for a fourth independent person as a director, and as such Mr. Barclay accepted the post at the last moment. The minutes of the meeting of the 27th of July showed that Mr. Barclay had not seen the deeds up to that time. His name was not even sent there in connexion with them. If he became a director just before the issuing of the prospectus, he could not have examined the excepted accounts, so as to have learnt the exact state of affairs. There was not, indeed, an atom of evidence that he was even at the offices before the 8th of August, and, considering that he went away in the Great Eastern on the 14th of July, and did not return till the 5th of August, it seemed very improbable that he took any part in the arrangements connected with the bringing out of the company. He could only have learnt what he knew about the concern from communications with the directors, and the jury was asked to believe that those communications must have been such as to satisfy him that the concern was a rotten one. Was that at all probable? If the Messrs. Gurney were honourable men they must have believed that the old firm was not insolvent, and expressed that belief to Mr. Barclay; while if they were engaged in a fraudulent conspiracy they could hardly have told Mr. Barclay that in order to induce him to become a director. This prosecution was, in fact, one of the most extraordinary prosecutions that ever occurred. It involved this assumption, that the old directors, contemplating a fraud, invited his client, a man of the highest honour and standing, to join them in committing it. One of the first things Mr. Barclay did after consenting to become a director was to subscribe for 1,000 shares, and thus incur a liability for 50,000l. Was that consistent with the belief on his part that the concern was a rotten one? Would any man in Mr. Barclayʼs position risk his reputation and fortune, and the future of his wife and children, from affection for a cousin? If Mr. Barclay believed the concern to be rotten, why should he have taken 1,000 shares when there was no difficulty in getting the public to subscribe? Moreover, why should he have kept all his shares when the price went up to nine premium? Dr. Kenealy had suggested no hypothesis which could reconcile that with a knowledge of rottenness on the part of Mr. Barclay. His case against that gentleman rested almost entirely on his having covenanted with the other directors that there should be a third deed, and he said the recitals must have conveyed to him the real state of the case. The third deed was not executed till the 4th of September, and, like deeds generally, it was drawn in that dreadful style which begins with sentences that never end. (Laughter.) In the Court of Chancery and at common law men were held to have read everything that was contained in a deed which they signed; but such a rule could not be applied in a criminal prosecution. He did not deny that Mr. Barclay was acquainted with the substance of the third deed. Without understanding the effect of the first and second deeds it was impossible to understand the third. The substance of the first deed was that the assets were to be transferred to the new company, subject to the condition that that new company might reject any accounts to which it objected, and that the old company was to wind up the excepted accounts, and to be responsible for any sum by which the assets might be less than the liabilities. The second deed provided that as the assets were realised every farthing should be paid over to the new company, unless the new company assented to payment being postponed, in which case it was to take place within two months. It was totally incorrect to say, as had been said on the other side, that by those two deeds the assets were taken out of the control of the new company. The first deed not having specified any period within which the excepted accounts were to be wound up, the second provided that it should be done within three years and five months, and that was the only provision which could possibly be said to be detrimental to the new company as compared with the old. The substance of the arrangement having, no doubt, been explained to Mr. Barclay, he thought there should be an agreement that if any member of the old firm died or became bankrupt within the three years and five months the sum due out of his estate in respect of the suspense accounts, instead of being postponed, should become payable immediately. Mr. Jones explained that matter by saying that Mr. Barclay knew at the time that one of the partners in the Norwich Bank was likely to die before the three and a half years had expired. Hence the third deed, which not only had a useful object, but had become operative in favour of the new company. There was therefore, he contended, nothing in the third deed which could justly be considered inconsistent with the bona fides of Mr. Barclay. There had been a great deal of unfair playing on the part of the prosecution upon the word “insolvent.” His learned friend Dr. Kenealy said the old firm were insolvent at the time of the transfer, and must have known the fact. If it were meant that the assets embarked in the business were not equal to the liabilities that view was correct; nobody could have read the prospectus and the first deed without perceiving that such was the case. Surely it was absurd to say that a common and ordinary partnership was insolvent because the liabilities were more than the assets, if the parties individually were men of wealth, and able to make up the deficiency out of their private means. It was on that footing that this transfer was carried out. And they had it in evidence, an estimate in the handwriting of Mr. John Henry Gurney of the private property of the defendants, by which it was calculated that after paying the whole sum which was calculated to be due on the suspense and guarantee account there would be a balance of 670,000l., including the amount to be received for the goodwill. Dr. Kenealy questioned the accuracy of that estimate; but as regarded Mr. Barclay, no one could doubt that he would believe that the estimate was a fair and right one. If he did not believe it he would not have invested his money in the new company; and if he did believe it, where was the fraud? Mr. Barclay returned to this country on the 5th August. He went to the office, and became a witness to the execution of the two deeds. Then he was present at the meeting at which the resolution was carried that Mr. Slater was to request Mr. Jones to do what was necessary to answer the requirements of the Stock Exchange. There was no evidence that Mr. Barclay knew there were two deeds, or that one was purposely kept back. Thenceforth Mr. Barclay acted as one of the directors of the limited company. Various imputations had been cast on the directors as to their conduct; but there was no proof of anything that he had done or said that could constitute a charge against him. But on the 1st January he made a deposit of 90,000l. without security. Between the 1st January and the 2nd May 19,000l. had been drawn out. It was said by Mr. Howell that he had drawn out the remainder. But it turned out that he had become a partner in the Norwich Bank just before, and was under an obligation to pay into the Norwich Bank 150,000l., and he transferred this 71,000l. from his own name into that of the Norwich Bank. The money was still there, but it was in the name of the Norwich Bank. Knowing he had to pay this money he got it ready. He had 90,000l., the Norwich Bank was not ready to receive it, and until they were he deposited it with the new company, and no inference could be drawn from that, except that he had the fullest confidence in the limited company. He now came to explain the transactions with the Norwich Bank. The partners in that bank had an interest of one-fourth in Overend, Gurney, and Co. The goodwill of the Norwich Bank was put down at 300,000l., a sum which Dr. Kenealy seemed to think was a great exaggeration, but which Mr. Turquand and Mr. Young thought was a fair valuation. The prosecution had no right to make allegations of fraud, and offer no evidence upon them, but Dr. Kenealy had not hesitated to charge fraud against Mr. Barclay with reference to the Norwich deed without offering a single atom of evidence in support of the charge. Capital having been withdrawn from the Norwich Bank in order to meet the demands on the London firm of Overend, Gurney, and Co., it was necessary to put fresh capital into it, and Mr. Barclay put 150,000l. of his own money into it, other parties also bringing in capital, the whole capital of the bank being 635,000l. It was estimated that the goodwill of the Norwich Bank would produce 300,000l. The counsel for the prosecution ridiculed the idea that it was worth so much, and then they inconsistently charged Mr. Barclay with entering into an arrangement for his benefit with the Norwich Bank, whereby the limited company was prevented from receiving that 300,000l. The fact was that there was a suspense account, which was to last till 1870, and during that period an account was to be kept of the profits of the company, and after deducting certain salaries, and 5 per cent. interest on the capital brought in, the balance was to be placed to the credit of the old firm, with compound interest, and therefore the actual sum to be obtained by way of goodwill would depend on the actual profits in the four years succeeding the formation of the new company, instead of the four years preceding. The result would come to the limited company because it came to the members of the old firm. His learned friend said the profits would depend on what was shown in the books, and it was insinuated that Mr. Barclay, a partner with five other gentlemen, would alter the books so as to show no profit. That was one of the monstrous insinuations made in this case. He submitted that it was absolutely impossible, with these facts before them, to convict Mr. Barclay. His learned friend admitted that Messrs. Gurney and Birkbeck might have been guilty of negligence, but he denied that Mr. Barclay had even been guilty of negligence. He never sold a share; he did all he could for the benefit of the company; and he confidently looked for an acquittal.

Sir John Karslake then addressed the jury on behalf of Mr. Gordon. He was one of the new directors, and his case differed widely from that of the members of the old firm, though he did not for a moment wish to say that there was any case made out against the members of the old firm. If that adamantine and granitic man, Dr. Thom, had desired simply that justice should be done, it was open to him to exclude from the indictment the three defendants who were not members of the old firm, but Dr. Thom had been a barrister, and knew well the effect of his course of proceeding was to shut the mouths of the whole of the defendants, so that none of them might have the benefit of the explanations which might have been given by the others. One charge which his learned friend had brought against Mr. Gordon was in reference to the Ebbw Vale Railway. Not one word of evidence had been offered in support of the charge, but his learned friend had not had the grace to retract it. Dr. Thom came there with considerable animus against Mr. Gordon, whom he had known for a long time as chairman of the Oriental Bank Corporation, in which he (Dr. Thom) was a shareholder. He said that he was influenced in taking shares by his opinion of the Messrs. Gurney, and of Mr. Gordon. At an Oriental Bank meeting he made a proposal that Mr. Gordon should be removed from the office of chairman, well knowing, as he said, that it would not be carried, and it was a fact that until he offered his resignation, Mr. Gordon retained that office, which he held for sixteen years, with the general approval of the company. He (Sir J. Karslake) asked the jury to consider what possible motive his client could have had for becoming a director in a bank which he knew must come to grief? So far as money transactions were concerned, he had had no previous connexion with the old firm; and why should he have taken 200 shares in the bank if he knew that its position was such that he might be a serious loser, the actual result being that he had lost 9,000l.? The absurdity of his learned friend’s case was that the new company could not fail to be ruined, and yet that Mr. Gordon, knowingly, incurred a risk of losing 9,000l. to obtain his salary as a director. His learned friend compared the case to that of a mock auction. If a person who was engaged in such an auction, took the articles himself, or made himself liable for large losses on account of them, the cases would be analogous. Dr. Kenealy said that Mr. Gordon had been acting on behalf of the National Discount Company in the getting up this company; but Mr. Slater gave evidence which entirely upset that theory. As to the framing of the prospectus by Mr. Gordon, he cared nothing for what was said on the other side. His learned friend said a great deal about erasures in the original draft, but they did not at all affect the question. Mr. Gordon had put in “The company have been fortunate enough to secure,” and Mr. Gurney struck out that phrase, and substituted for it “The company have secured;” for the word “peculiar,” as applied to the old firm, was substituted “well-known,” also by Mr. Gurney; and such alterations were actually made the basis of a charge of conspiracy! At the end of this wicked draft was the following:—“Allusion might be made to the fact of the immediate enjoyment of a large and profitable business.” To have omitted such an allusion would in his (Sir J. Karslake’s) opinion have been madness, as the public always showed a decided preference for a going concern over a business that had to be formed. His learned friend said that if Mr. Gordon neglected to make the necessary inquiries, he was guilty on that account. He was astonished at such a declaration, which was quite contrary to the law on the subject. Supposing Mr. Gordon to have made no inquires, that would be a ground of acquittal, even if he were proved to be the sole author of the prospectus; but he fully believed, as he had a right to do, in the representations of the old firm, and he acted on the faith of them. He acted as a director at an early period, but under one of the articles of association he would necessarily cease to be a director at the end of year if he were not re-elected. He attended the meetings held in St. James’s-square, at which Mr. Jones  was present; and it was at his (Mr. Gordonʼs) suggestion that it was determined to have an independent solicitor to assist in the preparation of the deeds, the gentleman called in being the solicitor of that Oriental Bank in which Mr. Gordon and Dr. Thom were both shareholders. The purpose for which the company was formed must now be clear to the jury. It was only the money dealing and bill brokering business that was to be transferred. That was stated in the prospectus, and an examination of the past showed that that business had been a most profitable one. Mr. Harding having stated the profit in ordinary years at 180,000l. or 190,000l. If such a business might not be described as a “profitable” one, what business could be so described? The whole burden of the indictment was that the business was worth nothing. In addition to the assets to be transferred there were 4,000,000l. of assets which were not to be, and never were transferred. Those assets were excepted, but the old partners became liable to the new company in respect of them, and guaranteed their solvency by means not only of the securities of the excepted accounts, but of all the private property they possessed. The new directors entered upon office with a full conviction that the assets would be sufficient, and where was the fraud of Mr. Gordon’s lending his name to the concern under such circumstances? He protested against the supposition that Mr. Gordon was negligent, his case being that he duly satisfied himself as to the sufficiency of the assets. Such arrangements could not be carried out without a variety of parchment documents, and hence the deeds of which so much had been said on the other side. As to the allegation that the deeds involved fraud, only one intending shareholder ever thought of examining even the first deed. When Mr. Jones went to Mr. Gordon with the two drafts, as ultimately prepared by Mr. Braithwaite, Mr. Gordon at once said that he need not explain them, that the matter was of course one of great importance, and that he should consult an independent solicitor, and that accounted for the second deed not being mentioned in the prospectus. If Dr. Thom had examined the first deed carefully he must have seen that there were exceptions which must require a second deed. In the first deed it was stated that certain accounts were to be excepted, and in one clause it was expressly stated that further deeds were to be executed if necessary. Mr. Gordon was charged with sinister motives because there was more than one deed, when, in fact, there was a complete answer to that in the first deed. As regarded these deeds his lordship had well pointed out the antagonism between Mr. Fooks and Mr. Braithwaite, the counsel concerned in their preparation, as a material fact. The scheme of the deeds, as already explained, was perfectly clear; the object was simple and proper, and no charge of conspiracy could be sustained on that basis. Mr. Gordon had no personal share either in placing one deed instead of two before the Stock Exchange, or in the entry of the five resolutions so often referred to in a separate minute-book. In criminal cases it was customary to point the evidence against a particular person, but as regarded the separate minute-book, Mr. Gordon was not even present when it was determined that it should be kept. There were many other meetings which he might call attention to at which Mr. Gordon was not present. Let the jury ask themselves what Mr. Gordon did that was fraudulent, or rather ask what interest he had in joining in a fraud. On the other hand, if they took this case, that he had investigated the accounts, and found that the firm had assets in hand of between ten and eleven millions, and accounts amounting to four millions, which, according to the evidence, were covered by the guarantee of the old firm—looking at it with the eyes of men who judged of the matter from what they knew at the time, and not from what they know now, he would ask where was the fraud or where even the imprudence? He asked them to separate in their minds what took place in July, 1865, from what took place afterwards. After all, this was a question not of indiscretion but of fraud; and he asked where was the evidence that Mr. Gordon had been guilty of fraud? On his behalf he appealed to them not for mercy but for justice, and he submitted that it would be unjust to give any other verdict than that of acquittal.

Mr. Giffard then addressed the jury on the part of Mr. Rennie. Mr. Rennie was a partner in the firm of Cavan, Lubbock, and Co. It was in evidence that that firm at one time was under advances from Overend and Gurney to the amount of upwards of 600,000l., of which 200,000l. was on promissory notes. Those notes were all met, and as to the remainder of the advance, which was on bills to the amount of nearly 500,000l., they were all taken up by the parties at the proper time. It was suggested that Mr. Rennie was induced to join in getting up the limited company because his firm had deposited 56,000l. with Overend, Gurney, and Co., and that he was afraid, unless the new company were formed, that that would not be recovered. But there was no evidence of this. Another motive suggested was that the limited company would give accommodation to Cavan, Lubboch, and Co.; but there was no evidence that they had ever granted to them a penny of accommodation. At the time of the examination before the Lord Mayor Mr. Rennie read a long printed statement entering into all the details, but the prosecution had not brought that statement before the jury, not had they attempted to impugn it in any way. Then it was in evidence that Mr. Peek had sued the defendants in Chancery, but the answers of the defendants were not brought before the court; and he was entitled to say that was because the prosecution had not discovered a flaw or a single inaccuracy in them. Now, what the jury were trying was whether the defendants did in fact conspire to defraud the shareholders. While Mr. Rennie believed at that time, and believed still, that the members of the old firm were men of honour, no one could doubt that it would have been well if they could have had the evidence of one or more of the directors. The first allegation was that the defendants conspired to shift the burden from their own shoulders to those of other people, heedless of the consequences, and determined only to save themselves at the expense of other people. Then, it was said the concoction of the deeds was of itself a proof that there was fraud. But he would submit that the evidence given respecting the deeds was a proof of the bona fides of the parties. Upon what hypothesis was Mr. Rennie and the other new directors to deal with Overend, Gurney, and Co.? He admitted that if Mr. Rennie had had infused into him the poisonous spirit which animated the mind of Mr. Howell, he would have strictly examined every book and every account. But he had no such feeling. He had confidence in the estimate which was put before him, and Mr. Turquand and Mr. Harding affirmed now that it was a fair and reasonable estimate. Mr. Rennie saw others like himself, independent gentlemen of fortune, putting their money into this concern, and he put his in also. Where were they to find the secret bond which bound Mr. Gibb, Mr. Barclay, Mr. Gordon, and Mr. Rennie to pledge their fortune and their honour to save the honour of Overend, Gurney, and Co.? The jury would say, under these circumstances, whether it was possible to surmise a fraudulent motive if they took away the unfounded accusations which had been made, and put the case coldly thus:—There was a deficit in the business of Overend, Gurney, and Co. (the partnership); Mr. Rennie had put before him a statement showing that there would be a surplus. Mr. Rennie had no motive which could induce him to imperil his fortune and his honour in a fraudulent transaction; and now when things had turned out badly was it to be said that he at that time knew the catastrophe that would happen? He ventured to say that that was absurd. If Mr. Rennie had not believed that the new speculation would be a successful one he would not have engaged in it; and when the jury looked at the evidence which was before them, and took into account that which was kept back, it was impossible for them to doubt that Mr. Rennie was not guilty of what was alleged against him. It was easy to be wise after the event; but he maintained that his client did that which any man of honour and prudence might have done under the circumstances. Surrounded by such traditions as the house of Overend and Gurney was, any man might have been glad to take part in the establishing of the limited company, taking care that the bankrupt estates were not inflicted upon it. He asked the jury, therefore, to say that Mr. Rennie was not guilty of the crime charged against him; and putting aside unproved accusations and violent epithets, he contended that there was not a particle of evidence that he was guilty of anything unworthy of a gentleman.

The speeches of counsel for the defence having thus terminated, at half-past three the court adjourned till ten o’clock this morning, when the Lord Chief Justice will commence his summing up.

The Daily News. Nr. 7378, 23. Dezember 1869. S. 2. THE OVEREND, GURNEY, AND CO. PROSECUTION.

Yesterday being the last day of the trial of the Overend and Gurney directors, the court was very much crowded, and great interest was manifested in the result.

The Lord Chief Justice having taken his seat at twenty minutes to eleven, at once proceeded to sum up the case. His lordship said—Gentlemen of the jury, it is very satisfactory to my mind, perplexed as it is by the difficulties which surround this case, to know that the question which I have to put before you is to be decided by gentlemen belonging to this great commercial community familiar with commercial and monetary transactions, conversant with accounts, and thoroughly versed in and acquainted with all the incidents of mercantile affairs. It would be presumptuous in me to suppose that in such a case I could afford you material assistance. At the same time, I feel it my duty to bring before you in a connected form the materials on which your judgment will be formed; and having done that, I shall leave you to draw your own conclusion, satisfied that the decision of so competent a body of persons will be one of justice to all parties concerned. My first duty will be to state to you the law on the subject. And, in the first place, let me draw your attention to the indictment upon which the defendants are put upon their trial. That indictment contains various counts, between some of which and others it is necessary to distinguish. The first six counts are framed upon a recent statue, the 24th and 25th of Victoria, ch. 96, sec. 84, which provides that “whosoever, being a director, manager, or public officer of any body corporate or public company, shall make, circulate, or publish, or concur in making, circulating, or publishing, any written statement or account of the same, knowing it to be false in any material particular, with intent to deceive or defraud any member, shareholder, or creditor of such body corporate or public company,” &c.—(the learned Judge here read the rest of the clause, which was an amplification of its term)—“shall be guilty of a misdemeanour.” After the counts framed upon that statue come counts for a conspiracy to publish a prospectus with intent to deceive and defraud. Those counts are counts to commit the statutory offence to which I have referred. With regard to these counts, it is material to the present case that one of the defendants, Mr. Barclay, cannot be convicted upon them; and if the cash had rested there, I should have directed his acquittal, because it is quite clear that he had nothing to do with the issue of the prospectus. But in reference to the other counts the case stands differently, because if you believe that Mr. Barclay was a party to the general conspiracy to defraud (of which the publication of the prospectus was the overt act), then each member of the conspiracy is responsible for the acts of the whole body. There are also some more general counts—one for publishing a prospectus with intent to excite the public mind to the behalf that the firm of Overend and Gurney was carrying on a prosperous business, and was in a sound and flourishing condition, with intent to induce certain persons to take share, and that Dr. Thom was so induced; and there are similar counts in respect to other parties. As to those counts, I must say that, with the exception of one or two persons to whom the counts individually relate, in my opinion these counts cannot be maintained. Dr. Thom and the other persons mentioned were not brought into contact with the defendants at all. They went into the open market, and bought their shares from this or that parson. But in any case these counts are not material, because it is certain that at least one person was induced to buy his shares directly, and upon these counts I need not say that evidence as to one person is enough. I have thought it necessary just to draw your attention to these secondary counts, though they can have no material influence on your ultimate decision. There is also a general count, that the defendants published a prospectus which they knew to be false, with intent to deceive and defraud; and there is a count charging the defendants with obtaining the money of Dr. Thom and other persons under false pretences. The last count in the indictment in general in its terms, and sets forth the particulars in which the prospectus is false and fraudulent, especially that in the purchase of the business of Overend and Gurney the defendants know that it was the business of a firm that was in debt and was unable to pay its debts. That contains the substance of the charge against the defendants. That charge extends over the numerous counts of the indictment, and repeated in various forms is really that stated by the learned counsel for the prosecution. The charge is this, that the business of Overend and Gurney being hopelessly insolvent and worthless, the defendants knowing that fact, conspired to induce persons to take shares in a new company, to which that business was transferred, with the view of defrauding and cheating persons taking and paying for the shares. That is the sum and substance of the charge, and if you believe that a conspiracy did exist, that this business was worthless, that the defendants knew it was worthless, and that having this knowledge they acted with the intent to defraud the intended shareholders, there can be no possible doubt what your verdict should be. This is not the less an offence because it is directed against society at large; because there may be no particular individuals against whom the machinations of the conspirators were directed. If a number of persons have conspired together to cheat any particular individual, there is no doubt that that is a criminal conspiracy. It is not the less so if the individuals to be caught and to be deceived were not immediately in the eye and contemplation of the conspirators. It is quite plain that any conspiracy to defraud such of the public as may be caught is a continuing conspiracy until it has attained to its completion. As soon as a particular individual is wronged by that conspiracy the conspiracy becomes in that case, if I may use the term, “individualised.” That conspiracy to deceive the general public becomes a conspiracy to defraud an individual. Therefore, if you have come to the conclusion that this charge is made out, you need not trouble yourselves about the numerous counts of the indictment. Now, gentlemen, having stated the law as I conceive it to be, I must take the opportunity to point out a distinction. We are not here to inquire into questions which might have been made available to the shareholders in a civil proceeding. It may be that there was some degree of misrepresentation, and yet nothing fraudulent. You must be satisfied, in order to convict the defendants of the offence, that these was a deliberate, guilty, decided attempt to defraud the public in this matter. Unless you are satisfied of that you cannot convict the defendants, and I tell you that more especially in consequence of one or two observations that fell from one or two members of the jury. You are to keep in view that in this case we are on the very confines of civil and criminal law, and we must take care that we do not overstep the line. A man may be liable upon a contract, because he has stated something which went beyond the strict line of propriety, and has concealed some fact. A man may honestly misrepresent—that is to say, he may state something to be true which he believed to be true, but which turns out to be false, and if he had entered into a civil contract he might be liable on a civil action. But that is not the case here. Here you must be satisfied that that which is alleged to have been misrepresentation was known by the defendants to be such, and you must be satisfied that, acting upon that knowledge, they had a deliberate intention to defraud, deceive, and cheat, in order to find them guilty of this offence. This case involves four distinct questions. In the first place, what was the state of the business of Overend and Gurney—was it the worthless and hopelessly insolvent business which, on the part of the prosecution, it has been represented to be? If it was in that condition, was that known to the defendants? If it was, did they misrepresent its condition to the public? And if so, what was their intent—was it thereby to deceive and defraud persons into taking worthless shares and paying for them with money which was to be appropriated to their own use? These are the four questions which you will have to consider, and I will take them in the order in which I have placed them. First, was the business at the time of the transfer a worthless business, as the prosecution has represented it to be? To determine that question it will be necessary to go somewhat back in the history of this mercantile establishment. That the house of Overend and Gurney had been doing a vast, I may say a gigantic, amount of business for a great many years, is a fact which is within the knowledge of every one of you. But it is not unimportant to turn to the figures, and to see the amount of money that was turned over by it. It appears that during the six and a half years which elapsed from 1859 to the 31st of July, 1865, both inclusive, the money turned over by this establishment amounted to the vast sum of 1,115 millions. From the years 1859 to 1864, both inclusive, omitting the last six months, the average amount of the business was 156½ millions per annum. The bills discounted from 1859 to 1864 amounted to 321,320,000l., being an average of 64,265,000l. a year. The profits of the period have been given me by Mr. Harding in a tabular form, as extracted from the books of the company, and it appears that the profits were as follows:—In 1851, 156,706l.; in 1852, 186,386l.; in 1853, 212,977l.; in 1854, 153,500l.; in 1855, 155,256l.; in 1856, 148,617l.; in 1857, 144,060l. The last year was notoriously an unfavourable year. In 1858 the amount was 293,000l.; in 1859, 442,074l.; and in 1860, 343,373l. It appears that these profits were divided into two branches, one being appropriated as the profits of the partners, the other carried to the reserve fund. In 1853 there were not profits divided, in consequence of some serious losses the firm had sustained by fraudulent metal warrants. In 1857, which was notoriously unfavourable year, the whole of the profits were carried to the reserve fund. Nevertheless, though there were no profits in these two years, the ultimate result is that in the course of the ten years there was an average profit of 220,000l. a year, and an average division among the partners of 146,000l. The next remarkable feature in this case is, that from this period down to the stoppage of the company’s business the earning power of the company’s business had never undergone the slightest diminution. From 1861 to 1865 no profits appear to have been divided. The reason for this is now well known. The fact is, that the firm had sustained grievous losses by engaging in the most insane and foolish speculations. From 1861, though the usual amount of business was done, yet no profits were divided, the capital of the firm having begun to be absorbed in the extravagant speculations of the firm; and about the middle of 1865 they found themselves in this state, that on an account of 15 millions, in order to balance the two sides—to make the assets correspond with the liabilities—it was necessary to set down an amount of 4,213,000l., which consisted of bad, or, at all events, doubtful debts. Not, indeed, that they were all believed to be hopelessly bad. On the contrary, it was believed that out of this sum of four millions at least one million might be recovered. But even so, there still stood on the books of the company a deficit of at least 3,000,000l. What was to be done under those circumstances? It is clear that a deficit of 3,000,000l. was neither more nor less than insolvency; and it is plain that at any moment an alarm in the public mind as to the position of Overend and Gurney, or any one of those crises which take place from time to time in commercial history, might cause a run and bring down this bank. At all events it is clear that the firm was insolvent. One of the liquidators, Mr. Harding, said he saw no reason why the old firm should not have gone on. But would it have been right for them to do so? I think most assuredly not. A business which is conducted with other people’s money, like the business of a bank, if it gets into such a position that there is a deficit which amounts to insolvency, ought at once to be brought to a close. A man who takes your money or mine without having the means of replacing it, if he knows that he is insolvent, commits a fraud. Therefore I think the firm was perfectly right in declining to go on under the circumstances. Mr. John Henry Gurney was perfectly right it declining—as I see from one of his letters he did decline—to continue the business further. But what was to be done? There is one alternative which Dr. Kenealy says they ought to have adopted. They ought, he says, to have declared themselves bankrupt, and to have paid their creditors as far as their large assets and private estates would go. I cannot help thinking, however, that we ought to make some allowance for men placed in these circumstances hesitating to adopt that alternative. The effect would undoubtedly have been to scatter this great business to the winds, and something must be allowed for men in the position of the Gurneys, with such a business and such a name, shrinking from bankruptcy. One cannot blame them for seeking another alternative. What, then, was to be done? If you are called upon to meet your creditors to-morrow, and are unable to do so, what is the course to be adopted under the circumstances? You may either sell the business, or you may do that which is most usually done—endeavour to obtain some new party or parties who will bring in capital to supply the existing deficit, which may have the effect of restoring the business to its full activity and power. Now nobody would deny that such a course is legitimate, if a man, in disposing of his business, is perfectly honest and open, and makes known the whole of the circumstances necessary to enable the person coming into the business to understand the exact state of affairs. But, on the other hand, if a person finds himself in that position, and is guilty of misrepresentation, he is to all intents and purposes guilty of fraud; and if a body of men join together to carry out such an iniquitous proceeding, they are guilty of conspiracy. You must, gentlemen, if you please, form your own judgment as to which of these two courses the defendants have adopted. Now, they made up their minds to dispose of the business, but at the same time to retain a material interest in it. They proposed to dispose of the business to a joint stock company, in which they intended to take a number of shares themselves. In what form and in what terms ought they to have proposed to invite others to join them in the new undertaking, so as to make the position of affairs intelligible to the persons with whom they were dealing? Suppose the case to be that of one, two, or three persons, and one or two persons with whom they wish to join. What would they say? “Here is a business of vast power, and capable of producing an enormous profit, but it is crippled by losses and is not at present in a position to go on. Upon an account of 15,000,000l. there is a present deficit of 4,000,000l., and an eventual deficit of 3,000,000l. We propose to sell that business and take shares in the new firm.  As to the 3,000,000l., that is reduced by the partners’ private accounts by a million, leaving a deficit of 2,000,000l. We propose to you to ask 500,000l. for the transfer of the business, but there still will remain a deficit of 2,000,000l.” But then suppose the old partners say to you, “Here we are, men of large property, and good for 2,000,000l., and whatever deficiency exists we will make up with our own private property.” Owing to other claims upon that property it only realised 1,000,000l., leaving still a deficit of 1,000,000l., That, gentlemen, is the state of the figures. Supposing that to be the result, and the deficit to stand at 1,000,000l., what was the business worth when those persons were invited to come into it? To make it, if possible, more palatable, the old firm said, “We will not ask you for a farthing in cash. We will take 250,000l. in shares and the remainder in paper, to stand against the guarantee; but even then we do not ask you to give us these shares, but they shall be held against that same guarantee, so that if we fail in any of our engagements to you, you shall be at liberty to dispose of the shares to settle whatever your claim may be against us.” The result is this, that the business with its working and earning power is to be transferred to the new proprietors without their having to pay a farthing in money. Was that a worthless concern, or was it not? If the earning power of the business was unimpaired. If the profits, as distinct from the dead weight of the bad debts, continued to be nearly 200,000l. a year, and if nothing but the introduction of 1,000,000l. was required to keep the business going, the question is—was it worth while that the million should be introduced? Suppose, gentlemen, that any of you were large capitalists, and were disposed to employ your capital in any speculation that seemed reasonably promising; suppose you had been made acquainted with the state of the business of the old firm of the Gurneys; suppose you had been invited to bring 1,000,000l. into the concern, and had been told that it would not be necessary to pay a single shilling down, and that the firm was in difficulties arising from some special circumstances wholly unconnected with its legitimate business—I ask you, would you have considered such an offer worth consideration, or would you have treated it as a proposal made only for the purpose of cheating or fraud? And observe, that as the balance of indebtedness of the firm has been shown to have been 1,000,000l., so it was about that very sum which the shareholders were asked to introduce. The full amount, indeed, of the 15l. per share was 1,500,000l., but from that sum 250,000l. has to be deducted on account of the shares taken by the partners. Now (the learned judge went on to say), everything in this case depended upon figures. The learned counsel for the prosecution denied the accuracy of the figures on the other side. In the first place, he said that the estates of the old partners had only realised 700,000l. or 800,000l. To that amount must certainly be added the half million in round numbers realised before the fall of the new company, and paid to the guarantee account. That, therefore, would make something above a million, although it was perfectly true that the assets and private property had not realised by any means what was expected. But then they must take into account the circumstances under which the securities were sold. They were told that they were realised under most disadvantageous circumstances. The jury will know from their acquaintance with the commercial world whether it was true that property which had to be realised within the last two or three years had been realised under disadvantageous circumstances. Now, with regard to the business, Dr. Kenealy said it had collapsed. Undoubtedly it had collapsed. It collapsed at the end of seven months. But was that owing to what was called its inherent rottenness, or was it owing to external causes? It certainly did not do less business than it did before, for they found that in that period of seven months 166,000,000l. were turned over, and that bills were discounted to the amount of 56,000,000l., which would be at the rate of 75,000,000l. a year, an amount, he thought, not exceeded during any similar period of the prosperity of the firm. The earning power, therefore, being undiminished, he did not see how they could ascribe to the inherent rottenness of the concern the rapid termination of its business which took place in May, 1866. It was shown that the profits during those seven months did not exceed 4,000l.; but then it was said on the part of the defendants that that was capable of easy explanation; that they went on with their deposits increasing till the 13th of January, but that a combination of circumstances tended to work mischief to the concern; that the interest of money gradually increased from 3½ per cent. to 8; and inasmuch as a great portion of the business must be done by rediscounting, they had to pay more for rediscounting than they had themselves charged. But the great cause which led to their downfall was a rumour that some of the Gurneys were selling their private estates. This created an alarm, and many persons who had deposited money with them began to withdraw it, so that between the 13th of January and the 10th of May no less a sum than four millions was withdrawn, a sum which was sufficient to paralyse any establishment however sound it might be. The Lord Chief Justice then referred to the evidence on that point, to the apparent discrepancy that at first existed between Mr. Harding’s evidence, which was founded on the statistics book, and the other books, according to which it appeared that only a little more than two millions had been withdrawn, and to the removal of that apparent discrepancy by Mr. Harding, who in his subsequent examination had pointed out that the prosecution had not included the reduction of the balances by the customers who had general accounts with the firm. The learned counsel for the prosecution said he distrusted the book of statistics, and he made some remarks, not supported by evidence but founded only on his own unsupported surmise, and he would almost say unwarranted suspicion, that Mr. Boys, the secretary of the company, had concocted this book, and that then, during some communication he had with the official liquidator, he shuffled the book in among the others, so that thereafter the defendants might have the benefit of Mr. Harding’s testimony, that four millions had been withdrawn from them, and so to account for their stoppage. He must say that in his opinion this was going far beyond the limit to which those who represented the prosecution had a right to go. If there had been any evidence to show anything of the kind well and good, but there was no evidence. Then with regard to the accounts of profits, it was very true that they were not brought out perhaps in the precise form in which the jury, as commercial men, might think they ought to have been, and if that had reference only to a recent period it would have borne perhaps a suspicious aspect. But they were not now considering whether the old firm kept their becks with perfect accuracy—that was not the question. These accounts of profits were of old date, going back as far as the year 1850 and 1851, and therefore in whatever form they appeared they could not doubt that the entries were genuine, and a true representation of the amounts carried to the account of profits at the time, and of the amounts divided between the partners according to their respective shares. But even supposing that they should think that these accounts of profits appearing in the books were not altogether satisfactory, yet could they doubt that upon a business of that magnitude the profits must have been very large, supposing that all the transactions had been confined to the proper business of the company? Mr. Harding told them that in his judgment the profits to be made from such a business might be fairly estimated at from 180,000l. to 100,000l. a year. At all events, the profits would be very large, and the jury would judge for themselves whether, if this business were capable of earning so much profit, the terms of the bargain for its transfer were fraudulent, or were such as might fairly be required by persons who desired to dispose of the business. Then it was said, “Your estimate of the property of the partners is altogether inaccurate.” Here again they must depend very much on what Mr. Hardy told them. The counsel for the prosecution said, “Don’t trouble me with estimates, don’t talk to me about calculations, I look only to the broad facts, and to the positive results. Here is an account showing a large deficit. It is an estimate of the private property of the firm, and it amounts to upwards of a million, but nothing of the kind has been realised. Don’t talk to me of the profits of the business that was to be done; it has all gone to ruin.” Now, it was not a question of what these things were actually worth, or what they might have been proved to be worth. The question was what they honestly believed at the time to be the worth of this property. If they were to judge, as the learned counsel wished them, simply by the light of events that had taken place since, that would very likely lead them to a conclusion which a more accurate analysis would show to be unfounded. They must see what those assets were honestly worth at the time that this transaction was entered into. They knew from what had transpired in the progress of this case that as between the old firm and those who were to come in as new directors, and who in fact were to be the representatives of the new shareholders, that calculations of this kind were gone into. A paper had been found in the handwriting of Mr. John Henry Gurney covered with figures, in which he estimated the private property of the partners at 1,658,000l., and the premises in Lombard-street at 40,000l., making altogether 1,698,000l., or 1,700,000l. in round figures. Then there was a sum in the Norwich Bank standing to the credit of the old firm, and which they were equally willing to give up, 590,281l. They had therefore altogether, in round figures, a sum of 2,300,000l. The jury would judge whether that was an honest estimate. That it formed the basis of the calculations which were gone into between the old firm and the new directors could not be doubted. The great disadvantage under which they laboured at the present moment was that those who alone could tell them what actually took place, what calculations were made, and what figures were gone into, could not open their mouths to give them evidence upon that which was all important for everybody to know. And here he must say that while he did not for a single moment question or impugn the motives of the prosecutor in this case, or of those who were assisting him, he thought it most unfortunate that in this case the new directors had been mixed up in the same prosecution with the old. He knew of no case which had produced on his mind such an impression upon a matter which had long been growing up, as his firm conviction that our system which committed the prosecution of offenses against the public to private prosecutors, a system which differed from that of every other European nation, was based upon a false principle, and that a public prosecutor was one of the necessities for the due and full administration of justice. If there had been a public prosecutor here he would undertake to say that he would not have put these three gentlemen upon their trial; but that he would have had recourse to them, if called upon to prosecute the members of the old firm—he would have called on these new directors to make their statements, and if in those statements he had found matter on which, in his judgment, a prosecution should go on against the members of the old firm, he would then have availed himself of their evidence; but if their statements had satisfied him that there was no ground for the prosecution, he would have abandoned it, or at all events, he would have left them free to call before the jury those witnesses who could have thrown light on this important part of the case. But as they were told by the Solicitor-General, inasmuch as the course taken by the prosecution would shut the mouths of those parties, and prevented the other defendants from having the advantage of their evidence, they were bound in common justice to see what was the conduct of these three gentlemen who thus entered into this enterprise. Did they suppose that men of business, men of fortune, men of commercial position would join themselves to a company of this kind, in which they were to embark large sums without going into mere calculations to see how far the terms proposed to them by the old partners were such as they could, as prudent men, entertain? Besides that, could they suppose that these men took that number of shares which they knew they did take, bringing themselves under large liabilities, without going into calculations? But what was still more startling was this. At a time when they were called upon to answer what was said to be a delinquency in having induced a mass of shareholders to take up shares on a representation that this was a sound company, what would the jury have expected men under such circumstances to do? Why, they would say, “Don’t blame us, we were the victims of the same delusion of which you are unfortunately feeling the consequences; we were taken in by the old firm. They told us that their assets were worth so much, and it turns out that that was delusive.” They now said, as far as they could say, that was by their counsel, “We do not complain of the members of the old firm; we believe that they acted in a spirit of fairness and honour. We do not deny that they disclosed every thing to us; we may have acted foolishly and imprudently, we may have involved others in the common loss; but we cannot throw the blame on the members of the old firm, because we cannot impugn the honesty of their calculation or the honour of their proceedings.” That being so, it was for the jury to say whether upon the whole of these facts there was sufficient to satisfy them that this concern was at the time that the transfer took place that worthless thing which the prosecution seemed to say it was. So much, then, for the first and most important part of the case. He passed on now to the second, which was whether the defendants represented this business as a second and profitable business when they knew it was otherwise. As he had before said, it was not because the defendants might have taken a very sanguine view of their affairs that they were to be visited with a criminal prosecution. The jury must be satisfied that the defendants knew that this concern was hopeless, and that knowing that they induced the public to take shares. He did not mean to say that the thing should be absolutely valueless; it would be sufficient if the value were so disproportionate to the amount set upon it that no man in his senses, if he had known all the circumstances, would have taken shares, and that the defendants knowing that, entered into a conspiracy to induce the public to take shares. Having dealt with the two first parts of the question, he came to what might be called the overt acts of this alleged conspiracy. The first and foremost of them was the publication of the prospectus. It was alleged that the prospectus was fraudulent in several particulars; and, first, in that it stated that it was not intended to call up more than 15l. a share. Now, the allegation upon that point would, as it struck him, materially depend on whether the jury believed that there was a deliberate conspiracy to defraud. If the parties believed that the undertaking was likely to be a successful one, then the probability was that, inasmuch as a payment of 15l. a share would realise, independent of the shares retained by the old firm, 1,250,000l., they did not intend to raise more than 15l. a share. If on the other hand the jury believed in the existence of a conspiracy, and that the defendants intended to get all the money on these shares to the extent of 50l. a share, and apply it to their own purposes, then it was part and parcel of the conspiracy. Then in the second place it was alleged that the prospectus was fraudulent in that it stated that the vendors would guarantee the purchasers against all loss. No doubt they did guarantee in point of law, but it was said that that guarantee was worth nothing in point of fact. That question would depend on what the defendants believed their private estates were worth when they undertook the guarantee. Then the prospectus went on to say that Mr. J. H. Gurney and Mr. Robert Birkbeck would retain a large pecuniary interest in the concern. He did not think much importance was to be attached to that. Two points of the prospectus still remained to which he had to call their attention. In the first place, what was the effect of the whole of this prospectus, including that part which spoke of the articles of association and of the deeds of the company? Would it produce an effect on the minds of those who should read it, that the concern was substantial and sound, in which persons might embark their capital with a fair and reasonable expectation of success? Now as to whether the prospectus had that effect they must judge partly from its contents and partly from the general evidence in the case, and he could not help thinking that looking at the fact that 500,000l. was said to be all that was to be paid for the business, and that there was a prospect of a large remuneration, the prospects certainly did appear to represent it as a sound concern. It was complete mistake to say that it made any representation as to the assets of the company so far as the 4,000,000l. of bad debts was concerned. They were told again and again that those debts were represented as the assets of the company. They were nowhere represented as anything of the kind, certainly not in the prospectus, certainly not in the deeds. On the contrary, the whole arrangement between the old firm and the new directors proceeded on the assumption that of these four millions only a limited proportion could be realised. He should say that there was a marked difference between this prospectus and almost every other prospectus that had ever formed the foundation of proceedings at law whether civil or criminal. Generally there was some misrepresentation or some material concealment which vitiated the whole of the statement—statements of assets which did not exist, and liabilities concealed, of anticipated returns which were all delusive und mere moonshine, of shares having been taken when in point of fact the number actually taken fell very short of that which was stated. And in many cases these misrepresentations had been the subject of legal proceedings not of a civil but of a criminal character. But here was this remarkable thing, that they did not import into the prospectus or into the representations made by the directors, to the proposed shareholders anything beyond that which the prospectus and the documents legitimately carried. At the same time, inasmuch as looking at this prospectus it was difficult to arrive at any other conclusion than that the directors intended to convey to the public that this was a concern in which if shares were taken there was the probability of a remunerative return, if the jury were of opinion that that was delusive, the defendants were answerable for it. It was said the prospectus was all delusive, and several circumstances were referred to, upon which the learned counsel for the prosecution dwelt at considerable length. The first was the meeting which took place in St. James’s-square. He could not help saying it would have been better if all that part of the case had been omitted. Then it was said, “Oh, here is a proof of fraud. Mr. Gordon drew out the prospectus in such glowing and exaggerated terms, that even before it was submitted to the directors somebody thought it necessary to modify many of the phrases, and, after all, the directors adopted a still more modest statement.” And it was suggested that the directors were prepared to go any lengths, but were deterred by fear of the law, and influenced by the necessity of keeping within the bounds of the law. Now he must say, having had a great deal to do with the administration of criminal justice, that the suggestions were not in the spirit that ought to animate those who conducted public prosecutions. He should have been disposed to draw exactly opposite inference, that when they found a body of men sitting down to determine in what way an undertaking which they proposed to bring out, that if they found them cutting down exuberance and reducing their statements to moderate and fair propositions, so far from believing that they had been actuated by criminal intentions, he should believe the contrary. He now came to the second ground on which the conduct of the defendants was impugned, namely, that the prospectus contained reference only to one of the two deeds by which the arrangement between the old firm and the new was to be settled. And undoubtedly it was true that the prospectus did refer to only one deed. Well, he thought it was equally true that to enable anybody to understand the exact nature of this undertaking, and the terms upon which the new owners were to be introduced into the concern, it was necessary that it should be made known to them that there were two deeds. Mr. Jones had given evidence on that subject, and they would weigh that evidence well and judge for themselves how far they could implicitly rely upon it. His account was this—“It was arranged that to the terms of the transfer should be comprised in a deed. I went to Mr. Braithwaite, the conveyancer, who thought it would be better that there should be two deeds. I did not think it right to interfere, and accordingly I gave instructions for two.” The drafts of the two documents were submitted to the new directors in the first instance, and upon the suggestion of Mr. Gordon and Mr. Rennie—to the effect that, as they were in effect the representatives of the shareholders, their interests might be antagonistic to the old partners—it was decided that the solicitors of Mr. Gordon should be consulted, and they employed their own conveyancing counsel, Mr. Fooks, to examine the deed. When Mr. Fooks looked at it he was not satisfied, but suggested a great many alterations in the interests of his clients, and there were consultations between the conveyancing counsel on either side, in which much time was consumed. It also appeared that a general election was pending; that Mr. Fooks went out of town for the purpose of a canvass; that the brokers had declared that the prospectus must be out by the 12th of July; that a meeting was called between Mr. Braithwaite and Mr. Fooks on the 11th, and that, after much discussion, the terms of the first deed were settled. The second deed remained. It was discussed again and again. The draft was cut about very much, as was evident from its appearance in court; but on the 25th of July the difficulties had been overcome, and on that day the draft was returned as finally settled with the assent of the two managers. On the 8th of August, or shortly before, application having been made by the brokers of the new company to the Stock Exchange for a settlement of the shares, the Stock Exchange, through its secretary, said the company must send certain documents, and amongst others the deed by which the interest of the old firm was transferred to the new company. The documents were sent on the 12th of August, and though at that time there were undoubtedly two deeds in existence, only one was sent. Mr. Jones said in his evidence that, inasmuch as only one deed was referred to in the prospectus, and that deed was the essential one as respected the transfer to the new company, he, acting on his own judgment, furnished only that deed. The learned counsel for the prosecution asked for the draft of the deed as finally settled, and he saw, when it was produced, that it purported to have been signed by the conveyancing counsel on the 11th of July, instead of bearing date the 27th of July, which was the true date, and Mr. Jones had told them that it was ante-dated for the sake of uniformity, and simply as a matter of business convenience. Now, though he did not feel inclined to disbelieve for a moment what Mr. Jones said, still it was a very unpleasant circumstance that such a material part of the transfer of the business should have been conveyed in a second deed to which no reference was made in the prospectus; that, although it had been executed for some days, it was not sent to the committee of the Stock Exchange, in answer to their requirements of all the necessary documents—

The Solicitor-General drew attention (in reference to the antedating) to the fact that there was an alteration by Mr. Fooks in the draft of the deed, the date of that alteration being the 18th of July.

The Lord Chief Justice said that was true. It had escaped his memory, and it showed no doubt that on that day the draft had been approved by Mr. Fooks. The question was, had the directors anything to do with the non-sending of the second deed. There were two witnesses on that point—Mr. Jones and Mr. Slater. Mr. Slater, the share secretary, said that the directors passed a resolution directing that he should send to the Stock Exchange what it required. He had, he said, no instructions to keep back anything, or to apply to the solicitor for one deed rather than another, the terms of the resolution being that he was to ask for such documents as would satisfy the requirements of the Stock Exchange. It was impossible not to feel that the withholding of the second deed was an unfortunate circumstance. The prospectus only alluded to one deed, but the true nature and effect of the transaction could not be learnt from a single deed, and he could not help thinking that the shareholders who were invited to join in that undertaking ought to have known that there was a second deed, and that the Stock Exchange, which exercised a wholesome and salutary influence over the formation of companies, through its promise of withholding a settlement if its rules had not been complied with, ought also to have known it. He could not help thinking that the public should take warning from this not to trust too much to others. It was impossible to look at the first deed carefully, and not see that something more was required to carry out what was contemplated. But the Stock Exchange passed the matter, and there it remained. He could not help thinking that the shareholders ought in some way or other to have been apprised what was the real nature of the arrangement between the old firm and the new company. Not that he believed that as regarded the great mass of the shareholders that would have made the slightest difference. It was all very well for men when they found that they had embarked in a ruinous enterprise to turn round and say, “O, dear me, if I had been told that there was a second deed, I should have gone and looked at it, and then I should have seen, not only that there was a deficiency of assets, but that the assets were to remain for three years and a half unsatisfied!” but when he found that after the issuing of such a prospectus, the number of shares applied for was upwards of 200,000, while only 83,000 could be allotted, he was very much inclined to think that it was not the deed or the terms of the transfer to which people looked, when making up their minds as to whether they should take shares or not. Mr. Peek, indeed, spoke on that point with admirable candour. When he asked him whether, if he had known that there was a second deed, he would have insisted on seeing it before asking for shares, he replied with perfect candour, “I donʼt think I should.” The applications for shares depended, he (the Lord Chief Justice) thought, upon the fact that three or four gentlemen of commercial wealth and standing in the commercial world were willing to embark their fortunes in the new company. This fact, combined with the names and reputation of the Messrs. Gurney, led the unthinking multitude without hesitation to invest in a concern which almost everybody at that time believed would turn out a profitable one. But that did not do away with the fact that an individual who might have been disposed to take a sensible and sound view of the circumstances of the case before he joined the new company should have had full opportunity of learning the precise state of affairs before he embarked his money. It was a wrong to such an individual if the information were withheld. That practically it was withheld there could be no doubt. There was nothing on the face of the prospectus, there was nothing on the face of the first deed, to apprise the shareholders that there was a deficit of large amount, and that with respect to it they must trust to the private fortunes of the old partners. He must say that he thought that if that had been known it would have made no difference. At that time the Messrs. Gurney stood in a high position in the commercial world, it was known that they were men of large property, and if it had been stated that there was a deficiency of one million, or even of two millions, but that the Messrs. Gurney had undertaken to guarantee the whole amount, persons would probably not have hesitated to embark their money. This reticence in a matter in which the defendants ought to have been outspoken might have arisen from a feeling that it was not desirable to tell all the circumstances of the arrangement, lest that should lead timid and cautious persons to withhold their contributions from a concern which must in the end turn out to be successful. There might, in that case, have been good ground for a civil action; but if there were no intention to cheat and defraud, the keeping back of the second deed would not amount to a conspiracy. Having now drawn attention to the three first of the four questions involved in the case—namely, first, what was the state of the affairs of the old firm at the time of the transfer? secondly, whether, supposing their affairs to have been desperate, and the concern worthless at the time of the transfer, what was present to the minds of the defendants? and, thirdly, whether there was any misrepresentation or concealment by them of the true state of affairs? He now came to the fourth question—supposing there were any misrepresentation by the old firm, and the new directors, what was their intention in making it? For he had more than once laid down in that case, intention was everything. The guilty mind, the malus animus, as it was called by lawyers, was essential to constitute the alleged crime in the eyes of the law. Simple misrepresentation, and that aided in the defrauding of the parties injured, the fair and legitimate inference was that the intention was that the act done should carry with it the consequences that ensued. But when it was doubtful whether the act was in itself criminal or not, and the intention became doubtful also, then it was most important to look and see what motives could have operated upon the minds of the parties who were charged with having done the unlawful act for an unlawful purpose. Now there was an obvious distinction which had struck everybody, the learned counsel for the prosecution as well as others, between the two classes of defendants. With regard to Mr. Gordon, Mr. Barclay, Mr. Rennie, and, he might add, Mr. Gibb, who was dead, it was obvious that, if there was any fraud in this case, they were as much sinned against as sinning, as much sinned against as any of the other shareholders who embarked their capital in the concern. The jury were asked by the prosecution to believe that four gentlemen, who were wholly unconnected in point of interest with the old firm, for the purpose of putting up that firm, and at the sacrifice in one case of 50,000l., in another of 25,000l., and in a third of 10,000l., embarked in what they knew to be a fraudulent scheme. The question was, what motive could they have for doing so? With regard to Mr. Gordon no motive whatever was suggested. With regard to Mr. Rennie, it was said that his firm had large transactions with Overend and Gurney, and that it would be more or less of a benefit to it if Mr. Rennie joined the direction. But it turned out that thought large sums of money had been received by Overend and Gurney, yet every shilling of that had been paid. Mr. Gordon, as he had said, had no interest whatever; and it might not be unimportant for the jury to consider what Mr. Gordon’s real position was. He was the chairman of the Oriental Bank, a concern to which Dr. Thom himself gave the highest possible character. He was a man of position and of wealth; and could they suppose that he, having no earthly motive to compromise, and to run the risk of sacrificing not only the 10,000l. for which he became liable, but to compromise, what was of more value, his name and his position, and that for this purpose he lent himself to a positive fraud? Then with regard to Mr. Barclay and Mr. Gibb, who were men fully conversant with business, did they suppose that they would be led to take 1,000 shares each, and make themselves liable for 50,000l. each, because they were connections of the Messrs. Gurney?

Mr. Mellish—My lord, Mr. Gibb was not connection of the Messrs. Gurney.

The Lord Chief Justice said he was much obliged to Mr. Mellish for this correction. Here, then, they had Mr. Gibb, who was no connection of the Messrs. Gurney, accepting these proposals, according to the prosecution, with a full knowledge of all that he incurred, because Mr. Gibb was a party to the deed, and making himself liable, not only for the large sum of 50,000l., but running the chance—almost the certainty—of the transaction at last appearing in its true character of fraud and cheating the public. Mr. Barclay was said to be a connection of the Gurneys; but so far as his experience had gone, he had not seen such family devotion as would induce a man to invest 50,000l. in what he knew to be a worthless concern, in order to benefit a brother-in-law, and to risk not only his money, but that which was more dear to him than money, his honour and his character, for that purpose. But then it was put forward that two of the directors were to get 5,000l. a year. But if the concern were really so worthless as it was represented that would soon come to an end, and in any case the directors were subject to removal by the shareholders at their first meeting. Then it was put to them as a fact, and a not unimportant fact, that these four directors kept their shares to the very last, that they had lost every farthing, that two of them had lost 40,000l. on their shares. Was that compatible with the notion that those men were aware that this was a rotten concern, and certain to issue in failure? If, as was common with public companies, they found men taking steps to rig the market to send up the shares, and to get out of it themselves as soon as they could, then they would naturally contend that there must be fraud at the bottom. But the opposite facts would lead them to a different conclusion. If they saw men embarking large sums of money, and periling besides their reputation and their honour, while there was nothing that they could get by it—when they might have got out of their difficulties by getting rid of their shares, and that they did not do so, and when they found that one of them in addition had 90,000l. in hard money for two months in the books of the company—if, looking at all these facts, they could not come to the conclusion that these men intended to enter into a scheme which they knew was based on fraud, and intended to carry it out to a fraudulent conclusion, they world express their opinion in their verdict. Now, what motive had Mr. Henry Edmund Gurney, Mr. Birkbeck, and Mr. John Henry Gurney—what motive could these gentlemen have had in doing what they did? They would observe that the defendants gave up all interest in the concern except that which was attached to the shares they held; that they gave up what they had standing to their names in their private ledger, and all claim to the house; that they pledged the whole of their fortunes, estates, and personal property against any deficit which might arise. They were to have for this 500,000l., of which they never received a shilling. As he had already pointed out, 250,000l. was to form part of the guarantee, and the other 250,000l. was to be taken as shares, which were to be held by the new company in case the property held by them was not sufficient to cover the guarantee, so that they had immediately no earthly benefit except that which should be contingent upon the success of the company. Mr. John Henry Gurney and Mr. Birkbeck were to get 5,000l. a year as managing direction for five years. Well, that might be some motive, but if the company was such as it was represented by the prosecution, it must have come to a standstill and breakdown, and there would be an end of the 5,000l. a year. It was said by the counsel for the prosecution that the Gurneys were already bankrupts, and that they therefore merely put off the evil day by establishing the new company, and that they had the advantage of the chances which might arise in the chapter of accidents. But then again, any advantage which they could secure would only be upon the hypothesis of the company going on, and what became of it if the company was rotten? The moment the company fell the Gurneys must have been involved in ruin, and what advantage would they get by putting off the evil day for a few months during which the bubble, if bubble it was, continued to exist? If they were of opinion that this was a bubble, and that, anxious to delay their own downfall for a time, the defendants held out prospects which they knew could not be realised, and invited persons to come into the business when they knew from the nature of things the company could not go on, they would have to find a verdict against the defendants; but before doing so they must be satisfied as to the intention on the part of the defendants. But if they thought that the defendants entertained an honest though a mistaken view in common with the other directors who were induced to enter into the new company, that all that was necessary was to get rid of that portion of its affairs which had been the source of embarassment; that if new blood, as it were, were infused into it, it would flourish—though they might think the defendants were rash, that was not the question, but they must be satisfied that there was an intention to defraud. They would have to say what was the impression upon the minds of those who proposed to form the new company—what was the state of their belief as to the probability of success. In the first place, he thought they must ask themselves what was the earning power, what were the profits, was that earning power continued to the last, and whether, on the whole, they were of opinion that the business, if relieved from the dead weight of the accumulated bad debts, was a business worth buying. They must say whether, at the time of the transfer, the defendants had the honest and reasonable belief that the business was worth the transferring—or, rather, if that was their honest belief—for though the reasonableness of it was also an element in the case, it was not the most important one. Did the defendants honestly believe that it was an enterprise in which, though the ship had become stranded for the moment, she could be get off again, and that, if relieved of the lumber and dead weight that oppressed her, she would again float upon the sea of commercial prosperity and success? If they entertained that honest belief, though it may have turned out to be fallacious, it was not to be concluded on that account that they contemplated the fraud attributed to them. After all, in deciding upon their guilt, the question again arose—what was their motive? Was it to induce the shareholders to join them in an enterprise which they believed would be for the benefit of all; or did they, for their own sinister and personal ends, induce them to embark their capital in a concern which they knew must fail? This was what they would have to look at—Did they suppose their design was to embark in a gigantic enterprise of fraud, which was to bring ruin and misery upon hundreds of families? You have been told—said the Lord Chief Justice in continuation—that your verdict is to effect great things—that the commercial world requires to be purified and regenerated. Gentlemen, you are not to be influenced by any such considerations. Independently of your verdict, it may be hoped that this memorable event—the downfall of this company, and the presence at the bar of this criminal court of men who once stood so high—cannot be without its salutary influence. We have been told that the commercial world is not animated by those lofty principles of honour—by those safe and sound principles of practical prudence—by which our fathers established the great commerce of the country, and made the name of the British merchant respected to the utmost ends of the world. We have been told that there has been established a spirit of reckless speculation and commercial gambling, and that the name of the British merchant dose not stand so high in the estimation of men as it did. If it be so, I trust that this memorable example will not be without its warning on those who are growing up around us. Here we have an establishment doing a business of an almost unequalled magnitude. The names of those who belong to it are known throughout the world as those of men of vast wealth and high commercial position. We have seen them fallen from their high estate. And why? Because they turned from the state and legitimate path of that commercial department to which they belonged. They went astray after vain and delusive projects. They embarked their capital, which they should have devoted to their own particular business, in wild speculations and rash enterprise. We have seen them, in consequence, fallen into absolute ruin. Their world-wide reputation is destroyed; their vast fortunes are scattered to the wind; their reputation is imperilled and tarnished; and, at last, we have seen them at the bar of this court as defendants on a charge of conspiracy and fraud. But it is not only the commercial world upon whom, as I hope, the lesson will not be lost. I trust it may not be without its influence upon the rest of society. There can be no doubt—any one who looks around him cannot fail to perceive—that a spirit of speculation and gambling has taken hold of the minds of large classes of the population. Men who were wont to be satisfied with moderate gains and safe investments seen now to be animated by a spirit of greed after gain which makes them ready to embark their fortunes, perhaps the result of a long life of toil and thrift, in the vain hope of realising immense returns by premiums upon shares, and of making more than safe or ordinary profits. We see that continually, and I hope this case will teach those who are ready to follow the ignis fatuus of such delusions that extraordinary profits cannot be sought without extraordinary risks; that it is unsafe to trust to names, however high they may stand; that it is dangerous to embark in enterprises of which they cannot comprehend the scope, and in the management of which it is impossible for them to have any share; and that by so doing, in the vain pursuit of great wealth; and that by so doing, in the vain pursuit of great wealth, they will too probably achieve disastrous ruin. If, I say, this memorable case shall have the salutary effect of checking the disposition to speculation which seems to pervade all classes, and which has led in this instance to high and illustrious names being soiled and tarnished—if this example shall be laid to heart by the world, and shall prevent men from engaging themselves and their fortunes in doubtful and disputable transactions—so much the better. I shall rejoice if such is the result. But that is altogether beside the question which you, gentlemen, have to consider. You have to say whether you believe that these gentlemen sold a business which they knew to be worthless. If not, gentlemen, the whole case falls to the ground. If you think it was worthless, you have to ask yourselves, did they believe it to be so, and did they, for purposes of fraud, induce other persons to embark their money in the concern? If they did, they are guilty; if they did not, they are not guilty. If you cannot see your way to the conclusion that their designs were fraudulent, then, although you may think that there were parts of the transaction which might well have assumed a different character, yet you will have the satisfaction of being able to acquit them; so that to that social, or at all events commercial, degradation, into which they have fallen there will not be superadded the painful consequences which must follow their conviction. At the same time, if you are of opinion, upon a full consideration of the evidence, that the case is made out, no consideration of compassion or pity ought to stand between the defendants and the duty which must rest upon your consciences as respects the verdict which you have to give. Gentlemen, I thank you for the great attention which you have exhibited throughout the whole of this case. Whatever may be the result of this trial, I take it upon myself to thank you on behalf of the public, and to say that no 12 men ever gave a more undivided, unbroken, and assiduous attention to a case, or even manifested a more anxious desire faithfully and honestly to discharge a public duty. (A spontaneous burst of applause followed the conclusion of this summing up.)

The jury retired at three minutes after 2, and returned into court at a quarter past 2. After they had ranged themselves in front of the bench.

The Associate (amid profound silence and breathless interest) said—Do you find the defendants guilty or not guilty?

The Foreman—Not Guilty.

A loud, prolonged, and apparently almost universal burst of cheers, accompanied by a vigorous waving of hats followed this announcement. When the manifestation of feeling had subsided,

The Lord Chief Justice, addressing himself to the crowd in the body of the court, said—That is very wrong; I ought to commit some of you.

Dr. Kenealy then applied for the costs of the prosecution, basing his application on the 24th and 25th Vic., under which the indictment was framed.

The Lord Chief Justice—Dr. Kenealy, if you had confined the prosecution to the three original members of the firm, although I entirely and unhesitatingly concur in the propriety of the verdict which the jury have just returned, yet, believing that this was a case for inquiry, as against them, and believing also that Dr. Thom was actuated by perfectly honest motives in instituting these proceedings, I should not have hesitated to allow the costs. But, inasmuch as in my opinion and judgment, the uniting of the other defendants in the same indictment and proceeding against them in the same prosecution was altogether unjustifiable, I cannot allow costs.

Dr. Kenealy—I hope your lordship does not include me in those remarks. I had nothing whatever to do with the matter.

The Lord Chief Justice—Of course I am quite aware of that; but I must say, that in the whole course of my experience I never heard of a prosecution which, as regards these three defendants, was less warranted, at all events, the including them in the same indictment, whereby their mouths were shut. I think, therefore, I ought not to allow the costs. His lordship added, a few seconds after—I am reminded by Mr. Davis (the associate), that I could not have allowed costs if I had wished to do so, in consequence of the case having been removed by certiorari.

The defendants then retired from the court, and as they successively made their appearance outside they were all greeted with hearty and reiterated cheers, which the seemed fully to appreciate.

In terminating the report of this long and important trial, it is but justice to acknowledge the courtesy and attention of Mr. Davis, the associate, and Mr. Wilson, the usher of the court, in providing, as far as possible, for the proper accommodation of the press.