The Express.
London, England, 1862-12-06 00:00:00

COURT OF COMMON PLRAft—DEc. 5.

Sitting at Nisi Prins in Middlesex. —(Befors Mr. Justice
Willes and a Special Jury.)

MAYAN V. LORD /RA' Z AND OTHERS. -TAR AFFAIRS Or

TIM BANK OP DEPOSM.
This was an action against Lord Keane, the Rev. Wm.
Bean, of Brixton and Worthing, and Dr. Henry Clark, of
Southampton who bad been directors of the Bank of
Deposit, in order to recover damages, in consequence of the
plaintiff having been induced by false representations to
become an agent of the bank, and having suffered in conse-

quence.
The defendants pleaded not
Mr. Collier, Mr. Ribton, end W. Dale appeared for the
plaintiff ; Mr. Bovill. Mr. Webby, and Mr. Archibald for
Lord Keene ; and Mr. Digby Seymour and Mr. Warton for
the other defendants.
Mr. Collier, in his opening speech, said that the plaintiff
was a gentleman whoresided at Plymouth, and thedefendante
were the chairman and two directors of an association that
had attained an unenviable notoriety, the Bank of Deparit.
He believed that it would scarcely be contradicted that the
Bank of Deposit had been one of the most gigantic swindles
of the present age. and although they might be already
aware of the circumstances to some extent, it would be has
duty to state • short outline of the case. Mr. Seaman was
induced to accept the agency of this society by false repre-
sentations as to its solvency and prosperity, when in fact it
had been for ten years and more in • hopeless state ; and he
was induced to open a branch at Plymouth, and to obtain
from a vast number of persons their deposits from hard
earnings, which amounted in the whole to 5,0001. odd.
When the bank failed in November, 1861, a bowl of indig-
nation was raised against him ; he was celled upon to pay
back the deposits, and he tried to retrieve himself by
starting another society, but he failed, because people
refused to join him on account of his having
been associated with this bank. Under these circumstances
he was obliged to bring this action to show that he was no
party to these frauds, and also to recover damages for the
injury which he had sustained. He (Mr. Collier) would
give them a history of this bank. It had its origin in the
National Investment and Assurance Association, which was
established in 1844 by deed poll, and which bad its office
in Lancaster-place, and earned on • quiet unpretending
business. Subsequently, fresh—but by no means better
—blood was infused into the society ; and Mr. Peter Mor-
rison joined it about this time, as in fact did also Lord
Keane. When the change took place • deed of settlement
was entered into, and every provision of that deed
had been systematically violated by the defendants.
The plan was that the funds of the association
should he divided into three classes ; the first was the
mutual investment fund, and under thim head came
all the deposits ; the second was the mutual assurance fund,
and the third the general fund. The holders of mutual
stock, it was said, "are to be entitled to interest on the
amount of stock held by them not exceeding 5 per cent. per
annum, as shall be from time to time determined by the
board of management, to be payable solely out of the profit@
that shall have accrued from the investment fund."
From that time, however, there never was cue shilling of
profit upon this mutual investment fund, sod yet for ten
years they paid interest ; and from what rued ? Why, out
of the deposits ; so that if a man deposited 5/. or ss.—for
they were not above taking so smalls sum—he was paid inte-
rest out of his own money. (A laugh.) The report of Messrs
Harding and Paolo, the accountants, stated " We do not find
that any profit has at any time arisen from the business
that has been carried on." " The following analyris of the
entries in the books shows the gradual progress of insol-
vency from 1852." It went on :—" The amount inserted in
the first column does not include any loss upon bad debts or
insufficient investments, as it does not appear that such
items have been dealt with," so that the account was moat
favourable for the bank ; but still it appeared that the
loss in 1852 was 4,9001., and the amount due to depositors
4,3001. ; in 1853, loss 11,259/. ; due to depositors, 30,5431. ;
in 1854, lass 18,105/. ; due to depositor; 79,1961. ; in 1855,
loss 33,0001. ; due to depositors, 118,0001. ; in 1856, loss
48,0001. ; due to depositors, 164,0001. ; in 1857, loss
66,0031. ; due to depositors, 179,0001. ; in 1858, loss
92,0001. ; due to depositors, 226,0001. ; in 1859,
loss 112,0034 ; due to depositors, 296,000/. ; and in
1860 the loss amounted to 147,0001. and the sum due to de-
positors to 348,000/. Was not this an astounding state of
cimumstanees, that the loos had increased to 147,0001., sad
yet all this time they were inducing unhappy depositors to
deposit more and mere with them? Now, a few words as
to the capital. In the prospectus it was said that the Ca-
pital was 100,0001. ; but that was false, for the whole
amount that was nominally subscribed was 20,0004, and the
real amount was not more than 12,0001. The accountant's
report stated, "Many of the printed documents contain
the words sod figures, Capital stook, 100,0001., but it dote
not appear on investigating the capital stock account that
the amount has at any time exceeded 20,000/., and of this
amount only 8,5931. appears to have been paid for in cash ;
7,1001. appears to have been issued in satis-
faction of • claim against the emaciation, and 4,3571.
arises from amounts entered to the credit of parties as cash
payments by them for capital stock. Such amounts, how-
ever, were not really paid, but were at the same time
charged to them in another account as loses, and which
loses still remain unpaid." Lord Keane began, for instance,
by being put down se holding capital stock to the amount of
5001.—• part of this 20,0001. ; yet Lord Keane never paid •
farthing, for he was put down on one side of the account as
holding 5004 stock, upon which he received dividends every
year ; and on the other side there was lent to Lord Keane
5001., upon which he was charged interest ; so that it was
altogether a mere juggle. In truth, their capital never
exceeded 10,0001., whilst their debts were hundreds of
thousands. Lord Keane became • director and • member
of the finance committee soon after be signed the deed, in
1851 ; and in 1857, upon Lord George Paget, the chairman,
leaving the companybecause hedisapproved of • mcatimproper
gambling speculation that they had entered into with • cer-
tain imperial company in Paris, Lord Keane became chair-
man, and remained so until the time of failure. The mem-
bers of the company formed only • private partrenhip, they
never having been incorporated, but in 1854 they obtained
an act which entitled them to sue and be stied as • corpora-
tion. They then extended their business in all directions,
and took an office in Pall-mall East, and established
branches in all puts of the country ; they advertised most
extensively, and they did all that they could to obtain de-
posits both large and small. Their annual liability for ad-
vertising and for working expenses amounted to no less than
82,0004, and their receipts were one half that, and
they must have known perfectly well the state of their
affairs. His learned friends would perhaps say it
was all Mr. Peter Morrison, but whilst Mr. Mor-
rison remained in England, the directors supported
him, though when he went abroad they threw
all the blame upon him, and said that they knew nothing
about it. The 82,000/. was the expense in London only,
that for the whole country being 154,000/. • year. The ad-
vertising in Loudon was 25.000/. ; salaries, 15,000/. ; sod
the directors received 13,700/. The bank stopped in No-
vember, 1861, hut in the last year, when they were upon
the brink of irrecoverable ruin, they received over the
counter 30,0001., none of which was entered in the books,
and what became of it nobody knew. At the time of the
failure there appeared to the credit of sundry depositors and
holders of investment stock 362,000/., and to other creditors
2,0004, whilst to the account of assets there was cash at the
bankers, M. 7s. 7d.—(a laugh)—in hand, 261. 10s. 4d. ; and
then there were various debts which were estimated to
realise 37,0004 ; and other property, 4.0001. ; so that alto-
gether the estate was calculated to produce 55,0004 The jury
might be inclined to ask how the bank got rid of the money,
and he could throw but • feeble and imperfect light upon
that matter ; but be could 'der to bow the prospectus said
that they were to deal with their funds. It said :—" This
company is established to open to the public an easy and
safe mode of investment." (Laughter.) "The Bank of
Deposit differs from ordinary banks in the made of employ-
ing its capital." (Loud laughter.) The Rev. Mr. Bean,
speaking in the prospectus, mid, "We are not as other
banks." (Renewed laughter.)
Mr. Bovill hoped that his learned friend would confine
himself to the cause of action.
Mr. Justice Willes--The cause of action being get-
ting the plaintiff to ester into the service of the defendants
by false representations.
fdr.Collier continued—The prospectus said :—" The money
deposited with this company being principally lent upon
well.secured life interests and reversions, on government
funds, and other property of undoubted security. The
interest, which has never been less than 5 per cent. upon
ordinary deposits, is payable half-yearly, in January and
July." One of the complaints of the plaintiff was, that he
was induced to join the company by • statement that it was
solvent. There was a statement that they were so solvent
that they were paying their interest half-yearly. Now, as
to their investments. They got up • bubble company in
Paris, called the Imperial, and they exchanged shares and
had transactions with that company which resulted in
20,0004 loss. They established the State Insurance Com-
pany, which had the same direction as the bank ; and that
company had been wound up and never paid • farthing.
The directors of the bank took 60,000 one pound therm in
the State-otfice, and they paid upon these 35,0004 out of
the depositors' money, and they also made • loan of 9,0001.,
which was likewise swallowed up. What they did
with reaped to the State Fire-office they did in
reference to the case of the Console, and also of the
Agricultural Manure Company ; all these transaciloas
being the struggles of drowning men who made desperate
ventures to retrieve themselves. Another affair with
which they were acquainted was called the Leghorn Bank,
with which they bad transactions to the extent of 80,0001.,
and it was credited with 20,0004 in the same way in which
Lord Keane had been credited. They paid 10,0001. into the
Bank of England to the credit of M. Gentle, an Italian &d-
-esolater, wieneeted with the Leghorn Bank, and the Rev.