The Sun.
London, England, 1849-07-16 00:00:00

YORK, NEWCASTLE, AND Bliß-

WICK R &IL \ V AY.

The ff.:Hawing are extracts from the second report of
this Committee of Investigation, and which is to be pre-
sented to the meeting at York, on Thersday next.
Your committee :eel it to .he their duty, without
further delay, to repoit upon certain matters, some of
which, in their judgment, require the immediate atten-
tion of the shareholders.'

1. The application of-the funds of this company in
the purchase of 2.345 shares i the Sunderland Dock
Company. • •
2. The allotment and mode of disposal of shares.
3. Purchases Of iron rails for the Noicastle and Ber-
wick Railway., •
4. Certain alleged payments to landowners and con-
tractors, on which the committee deem /relight to impart
„awe
information.
Your committee refer to their' former report as the
sanction by the shareholders of a subscription by this
company to the Sunderland Dock for 3,003 shares, or
75,0001. That ieport also stated that 2,345 additional
shares were purchased by'Mr. Hudson in the Sunderland
Deck underteking, principally in the year 1847, and
transferred into ,the joint oanaeS of 'himself and two
other directors, and that calls had been peid cut of the
funds of this company, .not caly on account of the 3,000
shares originally agreed to be inles,cribd for, but also
upon the additional 2,345 shares.' It-was also stated
in your committee's former report. that 62 8171. 10e.
had been paid nut of the funds of this company, up to
the 31st of December last, On account of the Dock
trausaetiens, awl that the smoue-t had been increased, at
the date of that report, to 91,79P1. 18v. 111 There is
now due a further sum of 5,8821. 10s. for an unpaid call
on these 2,345 shares.
Your committee have referred to the' minute books of
the company to esccrtain whether any -resolution bad
been previously come-to by the Board of Directors to
increase the interest held by this company in the Sunder-
land Dock, but they do not find either a resolution or any
intimation whatever that such,a step was contemplated
on the part of the company; and all the directors deny
any knowledge of such a purpose.
Your committee direct attention to the fact that,
although Mr. Hudson states ho made the purchttee of
those shares on behalf of this company, no minute of
his having done so appears in the books of the directors
until more than two years afterwards—not, indeed, until
the appointment of a. Committee of Investigation was
known to be in contemplation—and then in terms which
assume the previous ignorance of the Board. The calls
which became due from time to time upon the Dock
shares were paid oat of the fun& of the company, and
entered in their books when made; but were kept from
the knowledge of the . shareholders by excluding
the: amount from all the half-yearly accounts until
February last, when the sum of 62,6871. 10s. was en-
tered, but no information was even then given to the
shareholders that any further interest had been taken in
the dock than the 3,000 shares originally sanctioned.
It will be seen from the evidence that the transfers of
the 2,345 shares were taken in the joint names of Mr.
Hudson, Mr. Davies, and Mr. Richardson, but that these
transfers have not yet been delivered to thei Sunderland
Dock Company for registration.
Your committee have taken pains to ascertain whether
the shareholders' present at the half-yearly meeting in
February last (when the company sanctioned the Bar
Moor Branch Bill, in which was a clause authorising an
nlarged subscription for the Sunderland Deck to the
extent of 150,0000 had any information before them to
justify the statement that they approved of the subscrip-
tion to that amount; and your committee do not hesitate
to express their opinion that no such information was
aff mit d them, the clause never 'having been read or its
existence referred to in any way at the meeting. They
have, therefore, arrived at the conclusion, that what was
passed at that meeting ought not to preclude the share-
holders from now determining the amount to be sub-
scribed by this company to the Sunderland Dock under-
taking.
Your committee, however much they regret the indi-
vidual consequences which may follow from the company
refusing to adopt these 2,345 shares, are of opinion that
they ought not to be adopted, and that steps should be
taken to recover, the amount which has been illegally
paid. . . . . . .

The Newcastle and Berwick Railway nas projected for
the purpose of extending the line of railway communica-
tion to Berwick.

During the autumn of 1644 opposition was raised to
the scheme of the Newcastle and Berwick Railway, and
a rival line was projected. This rendered a larger out •
lay necessary than the 700,0001., which had been first
contemplated, and the estimate of the engineer was in-
creased. The directors of the Newcastle and Berwick
Bill, therefore, incn ased the subscription of contract for
the Newcastle and Berwick line to an amount eqeal to
the iocreaFed estimate. Previous to the Bill being in-
troduced into Parliament, Mr. Hudson executed the
subscription•contract deed for 8,000 shares; Mr. Davies,
the deputy-chairman of the Newcastle and Darlington
Company, executed it for 4,000 shares ; and Mr. James
Richardson, another director, also executed the deed for
2,000 shares; bat neither Mr. Hudson, Mr. Davies, nor
Mr. Richardson ex( cuted it in respect of the shares to
which they were severally entitled as holders of New-
castle and Darlington shares. Mr. Thomas Backhouse,
Mr. George Dods‘vorth, and the late Mr. Richard
Nicholson, who were all more or less connected with
the Newcastle and Darlington and York and
North Midland Railways, V 6 hich were at that time inti-
mattly associated in management, also executed
the subscription contract for 2,000 shares each;
thus making an additional subscription for 20,000
shares in the names of the six parties mentioned.
The reason for this execution of the subscription con-
tract has been fully explained to your Committee by the
solicitors to the company, as having been merely for the
purpose of meetieg the standing orders of Parliament;
and it has been proved to your Committee that no
bona fde payment of deposits was made by the parties
subscribing for the twenty thousand shares. If any
choques were given by the parties, which is very doubt-
ful, the operation was a mere device, asual at that period
with the directors of railway companies having to comply
with the standing orders of Parliament; and none of the
six subscribers for these twenty thousand shares pro-
ressed, at the time, that they executed the deed on their
individual account. . . . .

Your committee now find that instead of the register
of shareholders cerresponding with the statement of the
chairman, the number of registered;' shares has been in-
creased to 56.000, being mere by 14,000 shares than the
number which the chairman's statement would justify.
The means which have been adopted for carrying on
and concealing from the shareholders this operation
while it was being performed, are ouch as call for the
strongest reprobation. If the register of shareholders
had been made up, as it ought to have been, at the first
meeting of the Newcastle and Berwick Company, in
August 1845, such an issue could not have taken place
without at once exciting attention.
The evidence before your committee establishes the
fact that Mr. Hudson has taken for his own use from
the Newcastle and Berwick Company the extraordinary
number of 10,894 char€s, while the number to which
the resolution of the company over which he presided
entitled him, was 937 only. Of these 10,894 shares,
2;965 were obtained by him before the meeting of
August, 1846, while the shares were as yet scrip, and
when, as will be seen by the evidence, they were selling
at very large premiums. When the month of August
arrived, Mr. Hudson had disposed of all his scrip —it
roust be assumed at these lisp premiums—for, accord-
ing to the secretary's evidence, all the scrip came in for
registration in the names of other parties, and not
in the name of Mr. Hudson. Your committee, can-
not characterise this appropriation of scrip by Mr.
Hudson on his own individual authority, and for his
own use, other than as a most flagrant abuse of the con-
fidence reposed in him by the shareholdt r 3.
The mole in which Mr. Hudson appropriated to him
self the other 7,929 shares is equally reprehensible. The
register of shares had not been sealed at the meeting in
August, 1845. Mr. Hudson, however (unknown to his
brother directors), as stated by them, required the secre-
tary to enter upon the register of the company the
names of parties as shareholders whom he well knew
could have uo right to be there. His own name was
inserted for different lots, amounting in the whole to
.5,184 shares. The names of the solicitors to the com-
pany were placed on the register as holders of 1,546
shares, is hen they were not so in fact. The same was
done to the extent of 815 shares in the name of Mr.
Hudson's London broker; 85 in the Peale of the secre-
tary of the company; 80 in the name of the then
manager of the bank o which Mr. Hudson was chair-
man; and 420 in the name of the late Mr. Richard Ni-
cholson. The committee have it in evidence from the
secretary, as well as from the solicitors, that these en-
tries of shares in their names were made by Mr. Had-
son's sole authority for his own profit; and it appears
that as Mr. Hudson effected sales, ho sent or wrote to
the secretary to prepare certificates, which were made
out concurrently with the transfer of shares to the pur-
chasers; and the proceeds were appropriated to his
own use.
The committee have obtained evidence of the value of
shares in the market at the respective periods when Mr.
II uebmn was thus secretly carrying on these operations,
and they refer the strareholders to the quotations. It
appears from this evidence that the profits realised by
him on these transactions must have amounted to
145,704/., if the sales were effected at market prices. .

AS TO THE ALLOTMENT OF THE BICANDLINO JUNCTION

SHARES.

The Brandling Junction Railway was purchased by
Mr. lludton on the 13th of August, 1844. On the 16th
of the same month, at a meeting of the directors of the
Newcastle and Darlington Company, at which were
present Mr. Huilson, Mr. Davies, Mr. Richardson,
and Mr. Oxley, it was resolved that, "In considera-
tion of Mr. Huthwn transferring the purchase
to the Newcastle and Darlington Junction Company
on the same terms on which he purchased the slid
railway, the directors of this cnnpuly agree
,to give
him 500 shares of the new shares proimsed to be issued
by this company to pay the amount of purchase."
At a meeting of the Newcastle and Darlington Com-
pany, held on the 4th of Februarb 1845, the purchase
was confilined, and 22,000 shares m that company were
created at the meeting, for payment of the Brandling
Junction Railway. These 22,000 shares were appro
priated among the proprietors of the Newcastle and
Darlington Company, in the proportion of one new share