The Sun.
London, England, 1856-12-18 00:00:00

LAW INTELLIGENCE.—(This Day.)

COURT OF EXCHEQUER.

(Before the Lord Chief Baron and a Special Jury.)
THE SADLEIR FRAUDS -FULLARTON V. RHODES AND

ANOTHER.
This was an action brought by the plaintiff for the
recovery of a bill of exchange for 7001., drawn by
Messrs. Dunn, Hatterley, and Co., engineers, of
Manchester, and accepted by John Sadleir, and
accepted by him on behalf of himself and the defendants,
his co-directors in the Royal Swedish Railway Com-
pany.

Mr. Hugh Hill, Q.C., and Mr. Melhuien were coun-
sel for the plaintiff ; Mr. Wilde, Q.C., and Mr. Phipson
counsel for Mr. Edmonds ; and Mr. M. Chambers,
Q.C., and Mr. Aspinwall for Mr. Rhodes.
Mr. Hugh Hill, in stating the case to the jury, said
that this was an action upon a bill of exchange for 7001.,
drawn by Messrs. Dunn, Hatterley, and Co., and ac-
cepted by the defendants ; and the substantial grounds
of defence were, first, that the acceptance of the bill was
not theirs ; and, secondly, that if it were so, Messrs.
Dunn, Hatterley, and Co., the drawers of the bill,
had obtained it by fraud without consideration, and
that the plaintiff was not the bona fide holder of the
bill for value, having taken this bill before it had attained
maturity. So that, in point of fact, the two questions to
be decided were, whether the defendants were bound by
this acceptance, and if so, was the plaintiff the bona fide
holder of the bill for value, having taken it before it became
due. The bill was dated Manchester, Jan. 28, 1856,
and was drawn by Messrs. Dunn, Hatterley, and Co.,
and directed "to the Chairman and 'Directors of the
Royal Swedish Railway Company," and the body of the
bill was as follows Three months after date pay to
the order of ourselves in London the sum of 7001., value
received;" and it was accepted payable at Messrs. Mae-
terman and Co.'s, bankers, London, for self and co-
directors--John Sadleir, Chairman of the Board of
Directors, 12th May, 1856. The plaintiff was an iron
merchant in Manchester, and the defendants at the date
of the acceptance, and for a long time prior and some
time after the acceptance of the bill, were directors
of the Royal Swedish Railway Company. Messrs.
Dunn, Hatterley, and Co., the drawers of the bill,
were engineers and contractors, and were in the habit
of dealing with plaintiff for iron. In January and
February, 1856, they were indebted to the plaintiff,
who was the holder of two bills of theirs, on• for 3001.
and another for 2241. Bs. 31, one of which wou!d
become due on the Bth February, and the other on.
the 18th February. These bills had been paid by the
plaintiff in the ordinary course of trade into his
bankers, Messrs. Brookes and Co., bankers of Man-
chester, and there was besides this a sum of 901. and
1001. due from Messrs. Dunn, Hatterley, and Co.,
to the plaintiff. On the 4th of February, the
cashier of Messrs. Dunn, Hatterley, and Co., called
on the plaintiff, and produced the bill in question, and
he tendered it to him with which to retire the two
bills for 3001. and 2241. Bs. 3d., the balance to go
against what goods had been had since their drawing.
The plaintiff asked if the bill wao a good one, and he
was informed that it was, and that he would be safe
in taking it; and having reason to believe the statement,
he took the bill and retired the others when they
came to maturity. That was the mode in which the
plaintiff became possessed of the bill, and he therefore,
in the strongest sense of the word, became the bona
fide holder of the bill for value. He had no reason
to suppose, nor had any one then to suspect, any-
thing improper on the part of the Royal Swedish Rail-
way Company through the conduct of John Sadleir.
The learned counsel having stated the facts in
connection with the establishment of the London
Directory of the Royal Swedish Railway Company, and
the mode in which he sought to make the defendants
liable, and called the following evidence :
Mr. Fullerton deposed to the facts of his transaction
with Messrs. Dunn, Hatterley, and Co., as detailed by
the learned counsel.
In his cross-examination by Mr. Chambers he said
that Messrs. Dunn, Hatterley, and Co., afterwards
compounded with the creditors, and arranged to pay
the full liabilities in four years, by instalments of 2s. 6d
in the pound. Witness did not accede to that arrange
ment.

The Lord Chief Baron—What is your defence ?
Mr. Chambers and Mr. Wilde said that the defen-
dants could not be sued as directors, and that Mr.
Sadleir had no authority to bind them.
Mr. Hollingsworth, former secretary to the Royal
Swedish Railway Company, deposed that he knew the
defendants as directors in Loudon of this company
during the time he 'was secretary of the London board,
in the latter part of 1855 and the beginning of 1856.
John Sadleir was chairman of the board at the time.
The bankers of the directors were the London and
County Bank, and Messrs. Masterman and Co. The
accounts were sent in and examined by witness, who
reported them to Mr. Sadleir. The small accounts
were paid by cheques, and in the case of larger accounts
by bills drawn for stated periods.
The Lord Chief Baron—You must show me that the
bills were given by the defendant's sanction.
Mr. Hill—l propose to show the particular course
of business, and by doing that I render them liable.
The Lord Chief Baron—lt is essential to show that
a general authority has been given to the chairman
that will fix the defendants, but I think the evidence
of the general mode of business is admissible.
Witness—The greater part of the bills were drawn
upon the chairman of the directory, and accepted by ,
himself and copartners.
The Chief Baron—On what authority ?
Witness—The acceptances were prepared by himself.
, The Royal Swedish Railway Company was a foreign
company, with a board of directors in London, having an
office in Cannon-street. The acceptance in question was
drawn by him, and accepted by Mr. Sadleir. He be-
lieved it was for railway carriages, &c.
The Chief Baron—Were the bills accepted at a board
of directors ?
Witness—No, my lord.
Mr. Hill—Was a book kept ?
Witness—Yes. The directors met at a certain time,
or when they chose, and examined the bill book. It was
always in his possession.
Mr. Hillier, the present secretary, was called and pro.
duced the billhooks.
Mr. Hollingsworth recalled—The board met on any
day when there was business. The nominal day of
meeting was Wednesday.
The Chief Baron—Have you any books of the board's
proceedings?
Witness—One that was kept by Mr. Edmonds.
Mr. Wilde—The book is here if it is wanted.
Mr. Wilde—ls the bill book here ?
Witness—No.
The Chief Baron—Who has it ?
Witness—There were two bill books.
The Chief Baron—One that was made public, and
another that was made private ?
Witness—No.
The Chief Baron—Then, what is the meaning of it ?
Witness—Our book was kept for the entry of those
bills which were drawn for the payment of goods, and
the other for bills drawn to raise money to be sent to
Sweden—the money borrowed by Mr. Sadleir for the
purposes of the company. Mr. Sadleir borrowed
money for the company on his own authority.
Mr. Hill—Have you the other bill-book here (the
private one) ?
Witness—Yes.
Mr. M. Chambers—lt is Sadleir's book ?
Witness—l don't call it so.
Mr. Wilde—lt is indorsed with his name.
The Chief Baron—ls this bill of 7001. in that book ?
Witness—Yes.
Mr. Chambers—The book that has got Sadleir's name
on it?
Witness—lt was not there when I parted with it. I
did not know the bill in question was for goods, and
of February, the day of Sadleir'a
dlenthwereerfeorderapwunt
biyt
tinbetheabtairbmooakn.aloTnhee. biTllbsefrboimll
I made up to the 17th
death. - bSo
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Mr. Hill—Had you any conversation with Mr.
Edmonds at any time respecting bills of Exchange ?
Witness—Yes, occasionally.
Mr. Hill—Do you remember that in December, 1855,
in consequence of a message from Messrs. Masterman,
you saw Mr. Edmonds ?
Witness—Yes. I told him that Messrs. Masterman
and Co. had sent for me, and informed me that the bills
drawn and accepted by Sadleir alone on the directors
could not be paid by them, but that they must have the
signature of two other directors, and be countersigned
by myself.
Evidence :was then given to show that a number
of bills drawn in the manner objected to after that noti•
fieation of Messrs. Masterman, were advised by the
board, and the first advice of payment bore the names
of J. Rhodes, one of the defendants, R. Gilman, J.
Maeternoau, jun., and J. Sadleir, English directors.
Mr. Cra.ib, clerk to. Messrs. Masterman and Co,,
prAuced the order for payment and the bills referring
to them.
The Chief Baron—Were you in the habit of paying
the bills without the names of two directors ?
Witness—No ; I think, however, I have a few.
The Chief Barr:Li—You had an order in each particular
case?

Witness—Yes.
By the Foreman—Did you ever pay a bill without
an order ?
Witness —No.
The Chief Baron—Of course. Bankers don't conduct
their business as variable as the wind blows, but on
principle.
Most of the bills with orders of payment were pro-
duced, but there were orders without bills, and vice
versa.
Mr. Hollingsworth, recalled, said there were directors
to the company in Sweden as well as London.
The Chief Baron—Was the board here and there
considered as one authority, or distinct ?
Witness—Distinct.
The Chief Baron—ln what way ? Each could not
have direction over the affairs of the company ?
Witness—No ; the Swedish directors bad the ma-