The Sun.
London, England, 1867-08-20 00:00:00

SPIRIT OF THE PUBLIC JOURNALS.

DAILY NEWS.—The long and elaborate judgment
delivered by the Lord Chancellor, Lord Cranworth,
and Lord Colonsay in the case of Overend, Gurney,
and Co. (Limited), seemed to leave little to be de-
sired in the way of explanation. It is true, as we
have pointed out, that the Chancellor expressed an
unusually strong opinion as to the necessity of
shareholders ascertaining at the very earliest period
the contents of the Articles of Association. But

upon one point at least the three law lords were not
only strikingly unanimous, but most decided in their
opinion. The first question to be decided was
whether Mr. Oakes had been induced to take shares

in the new company by the fraudulent misrepresen-
tations of the directors. And the answer to this

question was answered in no hesitatino. manner.
The Lord Chancellor, after stating that at the time

when it was proposed' to form the new company the
old partnership was insolvent, proceeded to quote
the prospectus, in which it was declared that the
goodwill was to be sold for £500,000, one half being
paid in cash and the remainder in shares, with £l5
per share credited thereon ; " terms," it was added,
" which in the opinion of the directors cannot fail
to insure a highly remunerative return to the share-
holders." Now, what does the Chancellor say of
the prospectus and ,>f the conduct of those who
framed it? It had been said that the facts stated
in the prospectus were literally true. Yes, replied
Lord Chelmsford, but it concealed material facts
which ought to have been made known, and " the
very concealment gave the truths which were told
the character of falsehood." It had been said that
if all the facts had been revealed not only would the
formation of a new company have been impossible,
but the old firm would hare been inevitably ruined.
True, said Lord Chelmsford; but then no attempt
should have been made to form a new company,
because such an attempt was only possible by
concealing facts which ought to have been made
known. It is true that the most damaging facts
were all set out in a deed, but this deed was care-
fully concealed from those who were to be enticed
to become shareholders, but who certainly never
would have become shareholders if the contents of
the secret deed had been published. " The parties"
to the transaction, said the Chancellor, "some of
whom were both vendors and purchasers, arranged
among themselves for the payment of a sum for
this unmarketable good-will, the half of which must
have come out of the moneys of the shareholders."
It had been said that the directors really believed
that the company would be a profitable concern,
and upon the strength of that opinion they took
shares themselves, and never parted with them,
although at one time they were at a premium. True,
said Lord Chelmsford, but then each of the direc-
tors was compelled to have 200 shares as the quali-
fication of a director. " I entertain no doubt, how-
ever," he added, " that the directors were honestly
and sincerely of opinion that if they could procure
additional capital and could carry on some of the
business of Overend, Gurney, and Co. on a healthier
system, the company would succeed." But does
this amount to saying that the directors " were not
actuated by any dishonest motives ?" On the con-
trary, the Chancellor declared that as the desired
success could not be obtained without procuring
fresh capital, and as fresh capital could not be
obtained without " suppressing facts material to
be known," the attempt to form a new com-
pany should never have been made at all.
Nor does the Chancellor stand alone in this
opinion. Lord Cranworth said that the first
question in the case was the question of fact,
whether Mr. Oakes had been induced to take shares
in the new company by the fraud of the directors ?
It was unnecessary, indeed, to express any opi-
nion on
ithis fact ; " but," said his lordship, "it
mast not be supposed that because I do not
investigate closely the question of fact, therefore I
doubt the soundness of the opinion expressed by my
noble and learned friend. For the honour of the
great mercantile community of the City of London
I wish 1 could have believed that the prospectus was
honestly and fairly framed. But I cannot. I must
believe that the truth was intentionally concealed,
and hopes held out by those who framed the pro-
spectus which deceived those who trusted to it.
There was both suggestio foist and suppressio
Though the terms used by Lord Colousay have not
been reported, still those who heard him can have
entertained no doubt that his condemnation of the
conduct of the directors in issuing the prospectus
was not less severe than that of his colleagues. It is
indeed a melancholy task to be obliged to recall the
strange perversities of those who, having plunged
into the quagmire of speculation, strove with all
the wildness of despair to regain the position they
abandoned. But if leading merchants in the City
of London will lend their names to induce the in -
'accent and the unwary to embark their fortunes in
ruinous ventures, it becomes the duty of those who
are called to sit in judgment upon such conduct to
visit it with just condemnation. Above all, it is the
duty of the press and the public not to gloss over
or to explain away the severity of the condemna-
tion thus pronounced, but to give it the widest
circulation, and, if need be, to enforce the prin-
ciples upon which it rests. Arvid the disasters of
the Crimean war and the break-down of our admi-
nistration, nothing excited so much admiration
abroad as the way in which the Parliament and
the people of England summoned the whole wor!d,
as it were, to listen to the history of our blunders
and shortcomings. Amidst the commercial dis-
asters for which this country has of late been so
conspicuous let us not be ashamed to adopt the same