The Express.
London, England, 1851-02-13 00:00:00

TILE MADRID AND VALENCIA RAILWAY.

Yesterday, after fourteen days' continuous inquiry
upon the charge against the directors of this company, under
the act of parliament for the recovery, and for an recount
of, the 106,0301, received by them from the shareholders,
the ease was concluded with the defences of the Hon. Mr.
Villiers, M.P., and of Mr. J. 8. Waley.
Mr. Cairns, on behalf of Mr. Villiers, in • lengthy ad-
dress, relied upon the fact that none of the deposits had ever
passed through the hands of the honourable gentleman, or
ware ever in any way under his control. It was alleged'
that the directors stood in the fiduciary position of trestesei,
whereas it was merely a partnership forNgter or for went,
and that the question was solely one of account. He also
relied upon the Rpanish statutes, passed in July, 1846, which
confined the functions of the English director, to advice
and assistance as °erasion might require, to which terms, he
contended, Mr. Villiers had strictly adhered.
Mr. Gifford, on the part of Mr. Waley, argued &Gs no
part of the deposits had been received by his client. He
contended that Mr. Waley bad always done his dot, as •
director. and had endeavoured to promote We interest of
the shareholders. lie had always endeavoured to procure

the accounts of the company and the division of its funds
amongst the shareholders, in connexion with which there
had been at different times various suits in the Court of
Chancery (the proceedings in which were put in in evi-
dence), and to which Mr. Waley had been a party.
Mr. Selwyn then, in a speech of three hours. comluded
the case on behalf the official manager, contending that the
grounds on which he originally relied in calling upon the
court to make an order on the directors for the payment of
the sum of 106,0301. had only become darker and broader
than it was at first in the absence of certain doeu-
meuts and from the viva voce evidence of the di-
rectors themselves. By the original agreement between
the shareholder-, and directors, of which the prospectus w as
the proof, the nuinuttement of the company's aff.dn RAP to
he vested in an English board, assisted only by a buard of
directors in Spain. So far front the English directors hying
as had been alleged a subordinate body to that in Spain, it
was delegated to them not only to select the line of railway,
but to negotiate the statutes that were to govern them.

There was clearly no analogy, as has been inZsted on, be-
tween these eases and the MSC'S of acting and dormant part-
nen. It was the evident duty of directors so selected, with
such emends° powers, on disassecring that the undo rtaking
had failed, at once to Pet about returning the money in
hand, minus the preliminary expenses. It was also clear on
their discovering that the proper proportion of shares had
not been paid on in England, and a much less than the proper
proportion paid on in Spain. not to have allowed any money
whatever, whether in the shape of caution or other money.
to go there, for it appeared that the Spanish shareholders
had given up the whole concern, and that. far more for-
tunate than the English shareholders, had had their mouey
returned to them in full. The position of the directors, us
had been argued on the other side, was not that of a aim-
.

moo partners ip. It was nectxsary, owing to the difficult
and delicate duty of conducting negotiati ~,, s in Spain,
arising from a jealousy that, if it did not actuate foreign
eountnes in general, inspired Spain in particular. that thew
things should be done through a regularly appointed board
of directors, and not through the general shareholders. The

very fact of the obtainment of the Spanish statutes by the
directors, constituted in itself a tlagniut breach of trust,
since, owing to the total insufficiency of the shares that bad
been taken up, they had no right to render the shareholders
amenable to the Spanish government. This was the view
that the courts above bad taken in similar matters, holding
that, as soon L. it was evident that an English under-
taking for a foreign purpose had failed, it imme-
diately resolved itself into an English company.
amenable to English law, and was consequently within
the scope of the Winding-up Act, the directors
having undertaken the discharge of a confident duty towards
the shareholder*. It was not necessary• that they should
sign any decil, but it was sufficient to show t'sat they had
done such acts as bound them to the acceptance of the office.
It was nut a question as to monies which these directors
might have received, but of monies which, through their
wilful neglect and default, had disappeared, arising nut only
front 11011f,LIMUCC but from misfeasance. The chugs of
nonfeasance was enough to establish their liability. In sup-
port of which the learned counsel quoted the opinion of
the Master of the Rolls and other authorities in the caw• of

trustees who were called upon as liable to account, but who
sought to discharge themselves by saying that they did
nothing. The first and general charge against these di-
rectors was that, although they had every means of infor-
mation as; to what was going on, that nes erthelesa they did
nothing ; and, if the general charge of nonfeasance WWI not
enough, there were then seven separate breaches of trust to
bring against them, which not only hail au intimate eon-
, nexion with each other, but with the acts both of non-
feacence awl misfeasance. One of the first things that hap-
pened in connexion with the company was the purchase of
shares in the market, which Mr.Waley, one of the directors,
admits he knew of. This alone was an act of misfeasance,
and it was a duty incumbent on him to have used
redoubled diligence in looking into the matter, so
as to have informed the shareholders knowing that
this was a transaction in shares after the whole concern had
proved a failure, owing to an insufficiency of shares having
been takes up, and consequently the non-feasanee was mare
culpable than ever from the fact of the alternative nut hav-
ing been adopted of returning the money to theahareholden.
The real question was not what these directors knew, but
what means they had of knowing, and liability extended to
all where it could be shown that any one had either the
knowledge or the wane of knowledge. This view of the
law had been decided by Lord Langdale in the ease
of a passive co-executor. These directors knew that
these monies, instead of being properly iuveated in the
Three per Cents. or paid into court under the Trustee Aet,
or left in security at the hankers, had been lent without the
authority of the shareholders by Mr. Chadwick to the Lon-
don and South Westent Railway on the personal security
of the directors of that company. None of the directors
appeared to have inquired, whilst some of them alleged that
they knew nothing about these loans to the South Western
Company, or how they were to be repaid; but they one
and all said they could give no account of the transaction.
The purchase of shares with the company's fun& was ne,
attempted to be justified in the defence act up for the di-
rectors. It was a palpable fraud both upon the English
and Spanish shareholders:, and the result of the transaction
was—first, that the capital of the company, originally
grossly insufficient, was diminished to the extent of all the
purchase money paid in respect of these shares ; 2ndly, that it
was diminished to the extent °full future calls on the Aare.
that were so bought up; and thirdly, it enabled the dine-
ton to exercise a power which they'had no right to exert's..,
but which they did exercise, that of actually using the
shares thus purchased with the company's funds to outvote
the share holden at their general meeting.. Those fictitious
purchaser of shares having been actually purchased to in-
duct the Spanish shareholders to pay upon their shays.
The directors, moreover, rendered false accounts, in whorl
the shares so purchased were placed amongst what were re-
presented as bond, file shares, uud, according to the decision
of Lord Eldon, these gentlemen would he liable on the
ground of concealment in their giving only one-half infor-
mation to the shareholders when they undertook to give
the whole. It was a mockery to represent that the share -
holden had derived one iota of advantage from the loans to
the South Western Railway they had never re
caved a single sixpence from them, and the real
object of those loans was to inereao the personal intenart
and importance of Mr. Chadwick with the South-Western
Railway. There was nu justification whatever for this
loan, particularly when it was remembered that only 5:1,00,1
out of the 120,000 shares had been paid on. A glaring
breach of trust was the unauthorised appointment of
Messrs. Pocock and Palmer in persons in whine name
money was placed, and who had power to draw by chenue..
and the astonishing argument on the other side had been
rosined to, that the appointment of these gentlemen. in
whose names it was alleged the money had been placed to
prevent an attachment, only gave an additional security to
et, whereas it was well known that had the money never
been placed in their names the shareholders would not now
have to deplore the loss of it. It was at this, juncture that those
directors who might be presumed to have lumen intentions
were excluded from their councils, and that gross frauds were
commenced and committed. But even had the directors at
this period used reasonable diligence the catastrophe might
have been prevented. Under the present priset's every
person had a common interest in getting back his money,
and it was with this view that an official manager had been
constituted under the act to enable them to do so. lie, the
learned counsel, could scarcely trust himself to speak with
reference to the objections which had been made on hehalf
of Mr. Chadwick. (Laughter.) The strongest term, that
could be found in the vocabulary would seareily be ade-
quately expressive of the contempt, disgust, and indignation
which the ahartholdera in the Madrid and Valencia felt
towards the man who had so shamelessly betrayed them.
The man, who having been trusted by them to a certain ex-
tent, and by his co-directors to a still greater, absolutely be-
came dictator to the company, got into his poasession most
improperly, or into that of his solicitor, all the book, and
papers of the company, not for purposes connected with the
company, but for the purpose of defrauding and defeating
the just rights of the shareholders ; and, not content with
that, instructing his counsel in court to give an undertaking
not to part with the funds of the company, at a time when
he had actually parted with them all. This only went to
maks the case one of deeper and grosser fraud ; and it
really was a strong illustration of the leniency of the law
that a man under contempt of court, and who had swindled
the shareholders out of so large a sum of money, through
the default and neglect of his co-trustees, could not be con-
signed to another and a very different sort of juri.dietion.
After some further observations on the details of the ease,
the proceedings were adjourned for decision. An impres-
sion generally prevails that his Honour, in giving judgment,
will direct an order for payment by the directors of the sum
charged by the official aoaciagor.

PETITIONS FOR RAILWAY AND PRIVATE

BILLS.

GREAT NORTilegg RAILWAY.— The standing
orders were complied with in the awe of the three bills of
this company. The first bill proposes to enable the com-
pany to raise* further sum of 74,0001. by new shares, to
be considered the same as original shares, with power ID
borrow on mortgage such sums of money as shall from time
to time be authorised to be borrowed by an order of a meet-
ing of the eompany, provided such sums of money do not
eaceed in the whole 2.5,0001., in addition to the sums they
are already authorised to borrow. The bill also prow
an enlargement of the station at King'sceross, the in.iprove-
ment of the approaches, and diversion of the Old St. Pan- I
eras-road there ; also a deviation of the line at Weston, in
Idey.and Wakefilcl, to
coNottighanneentwmithshire—sthe tobitionne.s ahtit'olti n.
and 1 orkshire Railway
there with a branch railway from the Ponta
fact and Goole Railway to the corn warthouselt I
at Wakefield. The second bill is to enable the company to
make communication between their line and that of the
Manchester, Sheffield, and Lincolnshire Railway, with • I
branch railway to Grimsby Decks and a branch and station
in Sheffield, with power to raise 60,0001. and power to bor-
row 20.0001. The third bill proposes to enable the company
to make a railway from Mlktertou, in Nottinghamshire, to
Rossington, in Yeerkabire, and to divert their lint near
Gaineborough. Parliamentary agents, Messrs. Dyson.
ROYKTON AND HITCEIN RAILNLY.—The standing
orders were complied with to enable the Great Northern
Company to catend the Royston and Hitebin Railway front
ghepreth to Cambridge, and to make communication with
I the Eastern Counties Railway, and the Newmarket and
Chesterford Railway.
MIDLAND RAILWAT,—The standing orders were com-
plied with for authorising the purchase of the Leeds and
Bradford Railway, sad to empower the Midland Railway
in lien of raising 1,000,0001. by mortgage to create new
shame for that purpose with preference dividends. Parlia- ,
merino, agents, Messrs. Pritt sad Company.
enammer,..rofltluoinsedemera,n.yontothtlnieutLie
CANDNUN.B COALS/DOE AND LOCOED/I RAILWAY.—
zah. 0
for
reoiwalcosamSpLailonwawy
The standing orders wore eomplied with for changing the
5Yt years.

CALEDONIAN RAILWAY.—The standing orders RCM
complied with to enable thi. company to lea" the Mother-
well and Liamahargo ftraneli ltailwar, and to enable them
to enter into arrangements with the holders of guaranteed
and preferential inter, ta, and w ith each other, tor the ap-
portionment of the net revenneq of the undertali and to
borrow a further euin of 600,009 f. l'orlitunAltary arnts,
Messrs. Grahame and Vl'eema.

RLITITIAI4 CENTRAL RAILWAT.—The atantling orders
were complied with to enable the company to raise an addi-
tional sum of 2911.000/. by the creation of new *bares.
MON II LAND RA I LWAT S.—The standing order. were com-
plied with in thiscase.
Tits. SUNMARINE TELECIDATII COMPANY'.—The stand-
ing orders were declared to be complied with in the case of
the Submarine Telegraph Company between England and
between England and Ireland, and the European
and American Printing Telegraph Commtny, all proposed by
Mr. Jacob Brett, the patentee, of Hanover-aqua.*. l'arlia-
, mentary agent y, Messrs. Dyson and Co.
PARISI( OF CICRISTeIIt Rel, SOCTIIWARK.- -The stand-
: ing onlera were complied with in the ease of tI,L. bill, to
I empower the trustees of the will of John Marshill,
man, deceased, toalter, improve, or rebuild the pga.l.i church
of Christchareh—the church to be completed within four
years, with power to erect additional churelnw, thapels,
and schools, and to burns on mortgage 20,1.1101. Parlia-
mentary agents, Messrs. Dorrington.

THE SPANISH BONIMOLDERS AND THE
PROPOSAL OF THE SPANISH GOVERNMENT.

Yesterday a meeting of the holden. of South&
Bonds wax Weld M the London Tavern, to tuke
iota rmtwi+le-
ratinn the proimml of the rimini.h mitti•dem for the :oljted-
ment of the oli ht. The meeting was nuint riluOy :Mended.
Mr. Jammu l'aert, the chairman of the ruitimittee, %as
culled to the choir.

The CHAIRMAN Mill the adv;rths•ment calling the
meeting had been first inserhd in the paper: on stoeolay,
anti they litui been called together on so shon a notice be-
allele it WWI nceesstry it should at once sseetained
whether they would are (it to approve of the plan of pro-
ccedin4 chalaed out by the committee. The committee had
extonitted this proposal as compared with that trade in
the first instance by Bravo Muriho, which appeared in tho
Madrid Gu.:rtle m May lu.t, and with tile resolo-
tions tome to by the bondholders on too 'ISO' August.
They then resolved that the committee Ire authoriaed to
enter into are arrangement with the Spanish government
that fin. every 100/. of inock and 10 years of coupon., being
501., there should be given LW. &mitre stoek. to ono:nonce
interest on the Ist January, MI, at I per cent. is: annum,
the interest to increase at the rate of js. per rant. evcry two
year until it became 3 tier cent.
Now, they it 'tee hy
the terms proposed that instead of raising tit • inh•rest of 1
per cent. at the end of two years, the Spotith gos • rnmeot
proposed to raise the rate at the end of four y.-a:•, th-etiect
of which would be that they would get h per,',..:. in 19 in-
stead of in 17 years, as pomosed by the rommistee: and
instead of lOU per cent. far *the coupon., the Spatti.h go-
vrrnnwnt only olTered :to. With regard to the Eastken
they made a different provision altogether from that a h
the committee had asked for. The government proposed to
apply a sum of money annually to buy it up, the
sum to lie an applied being 120,000!. sterling per
annum, in addition to which they were to be
payable for national property. Now the stock which
Spanish eapitulists used to buy up in our market will be
converted into a stock that cannot he applied to that pur-
po.c, the consequence of whirl, will be that tin y will have
to resort to the passives 111,1 V and in Spain to pay thr that
aros rty, in addition to the 120.000/. a year for redemption.
There was another point which mane gentlemen thought
a situ yrus non, that the dividend should be made 'linable
in London. The committee did not know whether it was
to be made payable in London or not. Ile had written to
Mr. Weswedler on the subject, anti he should :nisi., them
to carry a resolution making it a pros i.ion to have
divi-
dend payable in London. lie had made it hi. boldness;
to inquire nt the Spanish agent here, and from the in-
formathm he gave him it appeared there was large
amount of debt not telying interest, about 37,poo,uuet.
sterliatir, provisional debt, not consolidated, and selling in
Madrid at about five per rent. Mr. Cape! then rend the
following letter, which he had written to the Spaneds
ninth:ter on the subject.
.• Excellent Sir,—As chairman of' the eommitlee of bond-

holden of the fiort;iwo tleht of Natio, I have the h.motir to
:ultimata your Mace Heavy, and to owe., tat the rift of
the committee, their great aatisfaction at the apprecitualiOß
of the project of law prowniteil by your Ere. Wiley ill the
..• . • .

.-
l'ort.c., for the settlenient of the istildie debt ssf Srpain, to
the tenns proposed by the honilhoblors, at the pule': meet-
leg in London on the 2t4th .tumest, IMO. lion over, On the
plat of the committee, I hale to express, their mg, so that
the teems are such that they cannot wholly recommend theta
to the aceeptant aof the bonolholders. They have called a
meeting of the bondholders for Wednesday, tin 1'.211i inkt.,
and it i- the intention of the committee to rmisseinssnd them
to ~.siss:st the terms, to far a% the capital of this Active Debt
is COnllt nos!, and they hate no doubt that the it's ins: Ow the
Passive and other stocks, not pac;ng int. reos. will he lip-
proved 01, with the exception of this coupons in arn,sr, the
terra, for which the committee canoe 114,111U11 MI :lir acs
iseptance, and which, if they did re oniniend, a ould he re-
I jectid by the Ismllldilers.
" Tit- commitUss adhere, and reeommend the Is suelleolilere
to adhere to the claim of an equality of mitts tin 'lt tin' the
tampon. with the comae', viz., 1101. of the 11l a stock for
t very Illef..sf coupon* given up: and when your Exes Ileney
bsur• in mind the origin of this ileht. ari•ing thou di, i.ls us
unpaid, and which should have 1)(1,1 paid le.sidarly every
half-y,ar, and that these dividends so impaisl lase sme due
upon stock, which by far the wean r part el it had, in the
year 1831, been reslueed one third in it, capital. or 31 per
tent., surely your Excellency will perceive ths• jtl.ii".l 111111
rea•tiniblenisss of the claims that the debt uri•ing from un-
paid COUII.II/1. hhould he placed upon an equality with the
capital, :.ed a full simount of the new snick should 1... issued
fur both.
I beg to represent to your Exeelleney that what I am
now on the port of the bondholders urging on your Excel-
!. ney 'ls us:rade:rut:ion is not much in aildit' to what your
Excellency has proposed, nor for a great country like :Spruce
to grunt, and that with the graslual increase of its n lenues,
turd the further great development which the I,ttlentent of
. the dent would induce, the additional charge which a con,-
plianee with what is now testiest fur would incur, would
scarcely be felt.
" Trusting that thews consideration, which I have pieced
before your Exc elbows will induee your Excellency and the
government over whijh you preside to amend the project of
' law now before the Cortes, according to the terns bailie:de&

in this utter, so that the bondholders may without hesita-
tion, and with art-Lunation, accord their eonsent to the tense
of uliastm•nt of the debt proposed by her Catholic Majesty',
goy..mime-at, I have the honour to by, oftc.,
JAVata ('test.,
" Chairman of the Cutiltilittee."
The CHAIRM A then proceeded to advise the Iti=l
not to use streig language in their pnaectlinp that day, ZS
if they wont( d to make better terms with the Spanish go-
vernment they must abstain from annoying them. To hita
it was a mutter of very little conse•queuet•. He held s curn
taro portion cl stock, awl to idler bought nor odd. The
'Alter which vame to him on I•'riday come by special courier,
which nest him 1201. Ile received the letter from Baron
Rothschild, nod at once promulgated the contents of it in
the market, and no one had time to du a bargain hie; ire the
contests were made known.
A BONDHOLDER inquired if the chairman could give
them any information as to the ett•ut of support which
their awn government was disposed to give them.
The CHAIRMAN replied that he had information. but
he could not communicate it. Their agent, Mr. W....m.611er,
backed by the Dutch agent, Mr. Weirton., was doing all he
could fur them.

A lIONDIIOLDER asked what amount of the Passives
had Men cony( rted into Actives since 1836.
The CHAIRMAN said, the agreement was, that when a
certain portion of the Actives was redeemed, a certain por-
tion of the l'avaives was to he taken in, but they would bear
in mii.d that not only no portion of the Actives had been
redeemed, hut that the interest Lad not been paid. The
chairman thr:s moved the first re elution, which was to the
effect that the bondholders approve or the principle on
which the terms are made, and express their satisfuetioa
at the close approximation to the terms required by the
bondholders on the 22nd August, 1840.
Mr. JESSEL, in seconding the resolution, stated his
opinion to is that the Spanish goveriunent had the means
of paying, bat that it had wasted sonic of those means in
sending an army to another country, and to put down the
liberty of that country. (.' Question.")
The CHAIRMAN remarked that they had better not p
into that.
.. • . .
. .

Thu rewict..n wnq then carried with but two disAentients.

odor resolution,' declaring that the coupons
ought to to converted into stock ut the full amount, ex-
pressing satisfaction et the efforts being made by the home
ertditors in Madrid to have their claim,' allowed; that Mr.
Weeweiller be instructed to lay the eluiuts of the English
bondholder before the Spanish govenonesit, and that the
regulation, with regard to the passive debt be seceded to.
were also pose d.
Gen. Sir 11. BAILEY moved that in order to mews Ihe
claims of the bondholders they should have the right to ror
serve all the claims which they now have, in caw• the con-
ditions now proposed by the Spaniels government be not
fulfilled.

The CHAIRMAN said they knew what that amounted
to. If the government would no ecp faith all they could
say would Lot make them. IT. *ally believed, however,
that the government meant to keep faith, and the terms
the bondholders had acceded to, coupled with the improvml
tsolittbn of the Spanish flitanwo, would enable them
do vi.

Vote. of thank', to Mr. Wesweiller, ti Baron Hottuschild,
and to the choirman and etaarnitwe were then paarrd, whisk
(howl tb6 rroceediags.