The Express.
London, England, 1867-01-23 00:00:00

?Lido ruttiliatnct.

lit,ol-ITV "iv.—.IAN. 22
(iktore Vicc-cha.Leiler 51,61in5.)

BE OVEUNI., uITNEY..‘No cu. (I.llll7Fl)}—oki:3S. AIM

ICE .." .4.,

When the cute was this inorning, Mr. Chase
drew attention to the fart tha: Vree-l'hiuseellor Wood
gave yesterday. in the 1....7C of the Itsperial Mercantile
s'rrdit Asseriatint. a j1:4:11v;it ..:.id.. he was inf..raed,
ws, founded L .teht ..; ta the decisions in 4hip's
case.

Mr. Fooks, will' Mr. fur M,. Cordon an)! Mr.
Itennie, argu.),l p..-;.5,:.. • in perfect
gowl faith. He )),..))).e., ..ez,..tiation proceeded.
and was cone:tided. ~,)) : that :':e new compto.y
should take the bm.)Em..4.8, -.110..,.0re.f. of liabilities it:
c•cess of the assets, l)::: u. • w.s J.:Ling in the p-ou.
pectus or the first whicl. lepresemed that the meets
e. cecliol or were c.v. !o t' e liabilities. and 1w W:•9
al ntid th.t the court ' e). le.? by the Attorney
Cenernl's stal..ment t. t,..)). -..oncous impression
as to the nature of tie c 0.)," ))...1.

IeNi.:••••:.,. no opinion upon t'le
subject Leyonit tiii,• tnnie ‘,4::icient in the not
d. est to Icsol p .uple nurai:... tUe reserved accounts
vv,re.

Fooks pointed liabilities and assets
connected with the e \ 01. 7t tut., were careful',
r•chaled from the op. ...AI, of the twit deed, and were
not Llit.l rivet by the r.evi smsmy The vendors
guaranteed the limited consp.my as,..'m•: any loss in the
:lanai realisation of the :4, aril t'.e )014000/. purchase
money was made available 4 plater! triarantee,
necs.,;arily that tLe might exceed the
onsets. There was nothing in the second deed which
was in any way inconsistent with the t;rst ; it merely dealt
with the 'minuet; in which the r-..a.i;:c I &enemata w, re to
be treated. hot there was no referent.• whatever to the
ese.casit of these ,rceonists. cetera did believe
that the hindiseiss in the hands of the new company ,our:
to 111;idy renaisirrative ; ;d i ;dui they woe justified s.
beEef. notwillistandink;. that it was understood Ik:raven
the partks that the which the new company
woahl love to take over would he 2,loas.tssd, in camas of the
see t., w al the guarantee of th- tr..; a,:ainst any defi-
ciency of ...et,. There was no ma .resirt ...;:tation of material
facts, and tl,'.e was no concealment beyond that which
was a Seditious ;old proper reticenc.• on the part of the
dia,ctots, and which was in by the share-
who were invited to in,!•ect tLe articles and sherd
of trunk.. and who noilould would have been furnished
with any further information they might have required.
'The i ice-Chancellor said it would be in vain to attempt
to peraua that the directors wes,ossified in stat-
ing A. 13 v Ortii 1,000,00 W. assets which were only worth
1.1101.'.1./. If. however, t7:ey insitcintly made the mis-
take tlmt was another ;.itestion, and he had already
piessti: hi, belief that these gentlemen were honest in
intention. The Liege sum which they embatked in the con.
own wan the la at evidence of gout faith.
H.. Fly, for Mr. It:inlay, ainither of the new directors,
drew att, titian to semsars in the cro,s-examination of Mr.
J. H. o:rney. which went to ,!.ow that Mr. Barclay
was not pre..eut at the meetings of the directors when
the draft prospectus was submitted, and the joselimht.ry
discos/do:is took place with reference to the affairs of
the ohl hem. Still Mr. Larchly did not wish to he to.
do-ens; ..s throwing any donht ennvi the allegation of the
twit t;le business could not f.iil to be remune-
rative' am:, inileed, he had shown nit belief .in its accu•
racy by taking :,900 shares in the concei-in involving a :lA.
bilify of '7'1,11..5",

36. Illot.he.v.of the common law bar, aupeared for Mr. I
S. H. Gurney. Mr. H. H. Gurney, and sir. Hubert
heck, the mcmheis of the old firm, who became directors
of the limited company. He stated teat these geutlettien
acted from fit.t to last with entire good faith. That there
bad been ergots of
,r.udgment he should not attempt to .ienv
after the car-.lid and complete admission made by Mr. J.
H. Gurney himself ; and no one could deplore more
greatly that these gentlemen did the csdamity which had
resulted fro the transfer. In twenty-one days' inquiry
nothing in to the cle.racter of these gentlemen
could •:ma during the Eve days that these
motions Lad been before the court his lionoar's attention
Led not I ,en directed to a single point which could fairly
lead to ti:e conclusion that they had been guilty
of any want of good faith. to 1:44 the
profits of the buskess were very little less than 200,000/.
a year, bet in that year the financial business as distinct
from the ordinary course of bill.bmking transactions was
mitered upon. end the first of those enormous loan cc.
counts Wag open.,l which resulted ill flee yew% in the
locking up of 4.00'0901. of capital. It was at Mr. Rennie's
suggestion tbs. it was proposed to introduce new capital
by the formation of a Joint-stock company, and when
the draft pros!.ectus was prepared, Mr. Gut uey thought
the eq.ressior highly remunerative" too strong, though
he was in.l,lcegl to believe that the hasiness would realise
a profit by the resolution of the directors of the limited
tympany to discontinue the money lending tonsinese. It
was altogether rt e..riance with the facts to say that the I
Norwich business six mouths after the, transactions was
transferred by the Gurneys to mealier* of their own
family, and that nothing was realised by the
transfer. The fact was, it was sot.! for the in-
troduction cf new capital, rendered 'greenery by
the withdrawal of the share of the capital held by the
Loudon cumpiny. end the price paid was to he four years'
profit, witb compound interest at the Hank rate, the
minted profit being estimated at $O,OOOl. It was reason-
ably expected that the share of this business would realise
the amount at which it had been stated—namely, :100,000(.
The members of the old fimi had not retained a single
shilling in their hands • the half million of money paid
for the good-will had gem sacrificed, they bad made
nothing by the sa:o of shares, and there was nothing in
their conduct but the most perfect assurance from first to
last that they were satisfied the company would succeed.
Ilr.ll/1. I:. Gurney took 4,000 shares in the company ; Mr.
J. H. Chaney, ; Mr. Dirkbeck, 2,015, ; and Mr. Bux-
ton, GOO.

The Attorney-General then replied. There could be no
doubt that the prospectus was the act of the company, and
not of iieliviuuals, and he thought it would be aufficient
for his purpose to show that this document was so framed
as to mislead the public. But, further than that, he con.
tended that it was puiposely so framed, and painful as
VAS the ante. he kid to charge gentlemen who bad lee*
held a high character with &dereliction of moral duty. A
moral fraud in its most simple definition was any con-
trivanoe resorted to for the purpose of deceiving, and justi-
fying the transaction to themselves was no proof that the
moral fraud did not exist. There could be no question
that in this a contrivance was resorted to to keep beck
pert of the truth. and that the statement of the pros-
pectus was nut put forward as a mere matter of °pinto.,
but as a statement founded upon facts supposed
to be univei,a(ly known, at the same time that tnom
who bad a knowledge of the facts were aware that the
universal aupe.,•itiuu was false. Concealment of the truth
in such a case wae a moral fraud of the very worst descrip-
tion. The argument upon the other side was that there
was no statement of assets or the profits in the prospectus,
and that every competent man of business would see at
once that there we. concealment, and intentional conceal-
ment. But in fact it proceeded upon the assumption of
the reputitiou the house had with the public, and the
impression it would convey to moat men would be that it
was idle and ridiculous to speak of the profits of such a
business. lloneaty would have been wisdom in this course.
If it land becu distinctly said that the directors
thought it advbeitle to withhold any statement of
assets and liabilities or profits, but were willing
that an examination should be made by some
one on the part of the public, who without disclosing the
mite of the concern should report whether it was one that
it would be prudent to go into blindfold, that would have
been a straightforward and honest course, but that course
not having been taken, a moral fraud was committed. The
peblic, is subscribing for shares, did so upon the assumption
that this was one of the best known ain't most profitable
concerns in the world, and with a view to take advantage
of that notoriety, the contrivances ream teal to were the
most skilful ever presented. If at the thus of the forma-
tion of the limited company, the proper course hail
Lees taken, the whole of the item of 4,000,0001.
of debt, with the exception of 1,082,000 f. which
was the estimated realisable amount, would have
teen written of. so that taking into account the
1,033,0001. appearing in the private ledger as the
balance of al sets ov 'l' liabilities, there would be an adverse
balance at the time of the transfer of 2,000,1)00e Besides
this, there were 1e.000,01.10/. of bills afloat, and it was ad-
mitted that as to en item of 8,000,00ie. of outstanding
bills of exchange. ti.ere had been a considerable loss in the
ten months that the company hail been in operation. It
must have been known that some lees would result from
these transactions. and at the lowcet estimate that loss
aright to Lave been calculated at I,ooo,omit. There W.W.
therefore, et the time of the transfer au insolvency to the
extent of 3,000,0ke.
Mr. Roxburgh drew attention to Mr. Robert Birckbeek's
answer, in cross examination, to a quest i..n with reference
to these bills. Mr. Birckbeck said, "We made a correct
estimate as to wleener it was necessary to mike allowance
for any loss Amor. the rum, and came to the conclusion
that these bills would all be paid and I believe that they
were all so pail, s.ith the exception of 600,000/. or there-
abouts."

The Attorney-General believed the loos was greater, bat
taking the excess of liabilities over assets at the smallest
amount, it was still clear that the old firm was insolvent
at the date of the tr,usfer, and that, even with the private
estates of the pirt:.ers accounted for, there would remain
a considerable del;ciency. But bo admitted that in trans-
actions of this natare a margin was required to meet un-
expectcil contint,oicies, such us a monetary panic, and it
was in that li,eht the guarantee of the private estates
should have been dealt with. The private estates, too, in.
eluded 767,0( tlair share of n.onirs on the Norwich
Bank ; and 300,00t4. their share of the goodwill of the
Norwich businti,, utid the former of these sums included
money due froze Molars. ()versed and gurney to the
Norwich firm.

The Vice-Chancellor was quite satiated that the gua-
rantee was not such, either in charaoer or amount, as
business men aLould Lave relied on. If these gentlemen
were entitled to rely upon a guarantee of the kind, it
ought not to bate been a person,' guarantee, but the
company ought to have had a lien upon the property.
The .Ittorner-General said. excltukng We guarantee they
come t the fact that the concern wa. absolutely insolvent
to the extent of 3,000,0004 out of IS,OOO,OtaX., or 20 per