The Express.
London, England, 1868-02-14 00:00:00

EvmuNG, FEBRUARY 11
, •T_ ri

COURT OF EXCHEQUER,—Faa. O.

Bitting, at NW Priam at Guildhall—(Before the Lord
Chief Baron and a Special Jury.)
C3OULIT If. ILWOISTIIT.

This was an action against the defendant for having by
false and fraudulent statements induced the plaintiff to
take shares and debentires in • certain company, while it
was in an insolvent state. The defendant pleaded not
guilty, and other pleas denying his liability.
Mr. Serjeant Ilallanty_ne, Mr. Joeeph Brown, Q.C., Mr.
Philbrith, and Mr. H. T. Atkinson were counsel for the
plaintiff ; the Attorney-Os:nerd, Mr. Hellish, Q.C., and
Mr. Lord were counsel for the defendant.
The plaintiff was Mr. Joseph Crossley, • member of the
well-known firm of John Crossley and Sons, carpet manu-
facturers, Halifax, and the brother of Sir Francis
Crossley, Bart.. M.P. for the West Riding of Yorkshire ;
and the defendant was Mr. Frederick Thomas Elworthy,
managing director of the London and Colonial Company
(Limited), which was now being voluntarily wound
under the supervision of the Court of Chancery. It apveared
that the company was formed in 1859 by maws-
random and articles of association for the
of purehaaing and carrying on the business PIT.
Robert Tooth, a hop merchant and brewer of porter end
ale et Burton-on-Trent and North Woolwich. The nomi-
nal capital wee 1150,0001., divided into 1,600 shares, of
1001. each. Mr. Tooth was to receive 40,0001. for his
freehold and lcaosheld premises at Burton and North
Woolwich; 5,0001. for the goed-will of the business and
15,710/. 12s. Id. for the stock-in-trade • or • total of
60,7101, 12s. Id. That arrangement we: carried out by
having allotted to him 450 fully paid-up shares, repre-
senting 45,0001., and by his re.thivieg 15.7101.125.1e1. in the
acceptances of the company, which were ultimately paid.
Seven persons signed the erticles of association. Mr.
Tooth, who was appointed chairman of the company ; Mr.
Edward Gilding, who took 50 shares and woo waisted
brewer • Mr. Charles Tooth, who took 40 shares, and was
appointed local manager ; Mr. John Blower, who we 36
shares, and became load director ; and three other (MAIO
men, who took one share each. The company commensed
business in Nov., 1859, and continued in operatics
until the 2nd of March last year, when an order
was made for it. winding op. The particular
period to which this investigation chiefly referred was
the Ist July, 1865, when the company issued a prospectus
and Wanes-sheet. It Deemed that Sir Francis Crawley
was co-treats* with Mr. Elworthy for the benefit of Mrs. ,
Elworthy, end becameßlworthy, intimate with him in that way. Oa
the 13th of June of that year Mr. Elworthy wrote to Sir
Francis urging him to invert money in the company. He
represented that the company had been working moons-
fully for six years ; that they were not in want of say tem-
porary assistance, but wished to have permanent capital
to supply the place of temporary capital which they is!
tended to dispense with ; that their debentures yielded
6 per cent, per annum, and were convertible at the optics
of the holder into fully paid up 1001. shares ; and that the
shares bad received an uniform dividend of 12i per cent.
Nothing was done upon that letter, but on the Ist July the
company published a prospectus in which the following
passage occurred; "The large and growing demand for
Burton ales at home and abroad can only be met by •
greater supply, and one of the valuable incidences of this
company is that, by a very moderate outlay in the existing
plant, it will be at once capable of doubling its pre-
sent production without any further expellee in
management, and with very little incise.e in the cost
of labour." It was next stated in the same
document that the past working of the company had re-
sulted in • uniform dividend of 121 per cent per annum
each year up to the 24th of Jane, 1864, and in
accumulated undivided profits amounting to 80,2801.
Is. 3d., as shown by the balance-sheet, and that
the past profits of the company bad been suffi-
cient to warrant the prediction of its making good
dividends for the future. On the Bth of July Mr.
Elworthy again wrote to Sir Francis, stating that they had
received as
.many applications for the new abuse they
proposed to =tie as they could expect, but that the com-
pany did not appear so well on the surface as it would on
close and careful examination, and mentioning that they
had not seen any triplication from Mr. Joseph Crossley.
the previous oorreepondence, Sir Francis had
lalluded to his having spoken to his brother, who had
some capital toinveat, on the subject of the shave. The end
of the matter was that Mr. Joseph Crossley applied on
the 19th of July for 5001001. shares, and on the 31st that
number was allotted to him. He pfd 150/.
m ax:hare, or • total sum of 25,0001. In
following Mr. F)worthy sent another
letter to Sir Francis, stating that his brother, in New
Zeeland, wanted 5,0001. to purchase some more land in
that colony, but that he bad himself no more money to
ware to advance him, and he would be glad to deposit
4coool. of debentures in the company with Sir Francis if
he would advance him 5,0001. upon his promissory note,
a which he would pay 6 per cent. interest. Sir Francis
spin communicated with his brother, and without halts-
Um the plaintiff lent the defendant the 5,0001. upon the
security of the debentures, which were wholly valueless,
and subsequently an additional 1001. In the letter asking
for the loan, the defendant said his interest in the com-
pany reached nearly 40,0001., that be had received 41,000 f.
out of it, and that he should not think of parting with
any of his interest in the undertaking.
Mr. &Omani Ballentine in opening the case, said that
the representations of thei defendant in his letters, and
the statements in the report of the directors as to the
sound and prosperous condition of the company were
wholly fallacious, that the losses enormously exceeded the
profits nearly every year, and that the dividends had
always be® paid out of capital. Mr. Joseph Crossley had
not only lost the 25,0001. he had paid on has shares, but •
similar s® for calls, making • total loss of 50,0001. in
connection with the oompan r lade ndently of the money
advanced to the defendant . He had taken shares
on the strength of certain statements which had lathed'
out to be fraudulent, and he felt he was performing •
public duty and benefiting the community at large by
bringing the matter before a jury and having the whole
circumstances exposed.
Mr. Arthur Cooper, of the firm of Cooper
accountants in the City of London, said that in IJawhaa
he was instructed by the plaintiff to investigate the boas
and account. of the company. It was then in the MUSS
of being wound up, and he attended at the Meth of the
liquidator and snide an investigation into the hikes, of
the company from its formation, with particular redisoses
to the prospectus and balance-these of June, ISM Ho
said the annyeay sold very little, If any, beer in biro'.
and that Unix trade was almost entirely export, tin hilW fel
eaurstits withagetralia. The nobealamoont oftheapMsl
paid in melt was cigg,lool., has a1n0a.L.2...t 20 0001. Wein
wee reeeked from diens if
the nieepeay. The emspasy M =the naiad I
noshed ier eenying ogee by drawfacltito=i
the andisece el Um goads they seat
were digegeated,ead laths event al thlehlated embeds,*
ilutwindibmalde wan maltesd, the ageigoay toe I....t.estm
TMs vent IS darks the 'Mb of the
Is the the geode wog esiesTi
11;77: We prises. lenheed '
ef as the prier tiny nand.
The witness was thug esindaed at peat se to the
date of the searloste yaw year from the
company until its dogma sad ameedisiglare
there was • groats dkarenney batman hie
of the ereepeo. Yoe- Wass% the oenol
their reale la 1861 at 7,418 L, while be qtr cis`
lose 4i /161. ; ta 1861 they raid the pewits eamemead ig
7,0031., whams the nasal lam was 7,0401. • In HOS est
chimed • profit of 12,2001., and he laid it nod mdse
lean 2.6171. • sad In Mt the yr it. were pat dews at
whSe they had its* • ion of mot lan Una

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