The Sun.
London, England, 1859-01-01 00:00:00

LAW INTEL-LIGENeR-Dec. 31:

COURT OF BANKRUPTCY.
(Before Mr. Commissioner Fane.)
IN RE WALTON AND WALTON.
The hearing of this case was resumed, by ad-
journment, from yesterday.
Mr. Lawrance addressed -the court on behalf of
William Walton. It was to be observed that,

throughout this prolonged inquiry, there-had not
been the slightest imputation of fraud against the
Messrs. Walton. All that was said was that they

had kept their books negligently. This was
dis-
proved by the books themselves, and, but for the
one-sided report made by the accountant employed
by certain creditors, there would have been no
attempt to impeach the accuracy of the books.
Every transaction was faithfully recorded. The
charge had been made solely to injure the
bankrupts with the public ; and the offi-
cial assignee had reported that there was
no ground for several of the charges that
had been made, and that the books had been well
and sufficiently kept. Much had been said about
the transfer of an item of £2,360 from one account
to another ; but, not only the court and the offiical
assignee, even Mr. Sargood himself had at length
admitted that there was nothing in that item.
Equally satisfactory explanations had been given
of other entries—as the one relating to Taplock—
which had only been questioned because they were
not understood. There was no pretence for saying
that those entries were made in order to deceive the
creditors ; the - charges of " tampering with the
books," " making them square," and so on, were all
" sound and fury, signifying nothing." One charge
was most unfairly brought against the bankrupts,
that of dealing in accommodation bills, and a trans-
action with. Phillips was fastened on as proving it.
The real facts appeared. to be that Phillips had bor-
rowed £250 of Messrs. Walton, for which a bill
was given, and afterwards renewed. Phillips had
then become liable for Messrs. 'Walton, and they,
in order to give him a claim against the estate, had
made a memorandum in their bill-book, admitting
their liability. There was no attempt at conceal-
ment in this ; the transaction was -perfectly open—
so open as to challenge inquiry ; and, as the debt
was a debt of honour, the bankrupts had acted most
properly in doing what they had done. The trans-
actions with Messrs. Barned and Co., and Messrs.
Oxley and Co., were wholly unimpeachable. They
rested on the very A B C of the bankrupt law
that where bills were accepted against goods,- the
holder of the bills was entitled to those goods. The
bankrupts had in no instance accepted bills for
anything but value, and the name of Mr. De Mattos
had been most improperly. dragged into the case,
as though he had been assisting the bankrupts in
what was vulgarly called " kite-flying." The trans-
actions nith Mr. Gibson had been the subject of
much inquiry, and if the court looked only to the
facts that had been elicited, and to the bankrupts'
books, it. must' come to the conclusion that these
transactions were perfectly regular and mercantile.
It was said that the bankrupts had used Gibson as a
mere puppet and cat's-paw, and that they had thus
been involved in a large loss. The purchase of the two
vessels by Gibson took place as early as 1848, he then
having advanced upwards of £3,000 towards the
purchase money. Mr. Walton,' sen., was then in
high credit, and had not the slightest difficulty in
raising £lO,OOO, if neeessary. The speculation was
not one &hors his business, but was perfectly legi-
timate and in connection with his business of a
ship broker. That the undertaking resulted in a
loss did not impeach its bona fides. It was said
that the bills given by Gibson were accommodation
bills, but there was no pretence for the allegation.
Even if the bankrupts had obtained accommoda-
tion bills to be given in their favour, that would be
no offence; as their estate would have had the benefit
of it. This had at length been admitted by the
learned counsel who opposed. But why, then, make
so much fuss about it? Why drag before the court
names like that of Mr. De Mattes (who stood in the
very highest position in the City) when these men
could not be heard in their own defence ? It was
said that the bfinkrupts had had bill transactions
with Gibson to the extent of £16,000. When the
Messrs. Walton first heard that they were aghast ;
but it turned out that this sum was arrived at by
adding together all the successive bills.
The Commissioner—A single bill for £l,OOO
renewed sixteen times might produce that result.
Mr. Lawrance proceeded to discuss the circum-
stances connected with the purchase and sale of the
Sarah Sands. Had the purchase been made by the
bankrupts alone it would have been a most impro-
vident act, but it was on the joint account of them-
selves and Messrs. Lloyd, Bielby, and Co., who
were eminent merchants and shipowners. Those
gentlemen were joint owners throughout; and had
not the bankrupts sold their moiety, the assignees
could not have dealt with it until they had dis-
charged all., the liabilities which might exist as
between the bankrupts and Messrs. Lloyd. -
The Commissioner—Do you mean to say that no
injury has arisen to the creditors from the bank-
rupts selling their moiety?
Mr. Lawrance contended that that was so.
Mr. A. Turner said that the debts of the Sarah
Sands had come upon the estate.
Mr. Barker, one of the assignees, said this was
not the case.
Mr. Linklater stated that Messrs. Lloyd, Bielby,
and Co., had paid in all upon this vessel £27,000,
and had only got back £22,000, including £12,000
the insurance on the vessel.
Mr. Lawrance said that the whole of the pur-
chase-money, except £5OO, had been supplied by
Messrs. Lloyd, Bielby, and Co. Even had the pur-
chase been made by the bankrupts on their own
account, it would not have been improvident, for
the ship was then under charter to the East India
Company for the conveyance of troops. From this
adventure a very large profit would have been de-
rived, had it not been for the unfortunate destruc-
tion of that ship by fire. Before this occurred, the
bankrupts had determined on getting rid of their
share of the risk, and had parted with their moiety
of the vessel at a loss of £l,lOO.
The Commissioner—Why should they have sub-
mitted to that loss ? -
Mr. Lawrence said the Sarah Sands had been
beaten in sailing by other vessels, whereby her
value had been depreciated, and she had lost her
chance, by her late arrival at the Cape, of obtaining
a return cargo from India. This induced Messrs.
Walton to dispose of their int, -:est on the best terms,
they could get. Objection -Lad been taken to the
mode in which the bankrupts had dealt with the
proceeds of their moiety' of the ship—Xs,soo ; it
was said that they had retired certain bills not then
due. -What was the fact ? The bills of Broadwood
and Barclay had been taken up six weeks before
the sale of the Sarah Sands. The allegation was
now withdrawn—after the charge had done its work
by being published in the papers of that morning.
After the withdrawal of these bills from the Bank
of England, the bankrupts had received and paid
in the ordinary course of their business £47,422,
and of this sum £19,612 had passed through their
hands in the last three weeks of their trading. In
the course of the year 1857, their receipts and pay-
ments had amounted to £323,309, and in one month,
July, to £40,000. This was not an exceptional
year, but a fair average of their transactions.
After discussing the payments to Beach and.
others, Mr. Lawrance complained of the un-
founded charges that had been made against
the bankrupts, who had borne an -unblemished
reputation during the whole of their commercial
career. It was said that the underwriters were
aggrieved creditors, but the total amount due to
those gentlemen was only in respect of the current
year, and for the fourpreceding years, the, bank-
rupts had paid up wards of Zfrf,ooo in Lloyd's room.
If the underwriters chose to give a twelvemonth's
credit they must take theconsequence. The amount
now due to them was not larger than it had been at
the death of the bankrupt's father, and at former
periods. The character of the bankrupts' trading
ought not to be judged by its result ' • it was of a
speculative nature. The father had been in busi-
ness for forty years, and had carried it on without
blemish ; and his name was known and respected in
every port in the world. His property was sworn
under £50,000; up to his death he believed himself
perfectly solvent ; and his sons expected that they
were left in a position of affluence. Still they che-
rished the most affectionate reverence for the me-
mory of their father, and imputed nothing. reckless
in his trading. His executors had been called on to
contribute along with other shareholders to the
payment of the debts of the Royal British Bank ;
and the contribution asked from them was £20,000.
In the full belief that they had succeeded to a lucra-
tive business the bankrupts carried it on. How
then were they chargeable with reckless trading ?
Mr. W. Walton had gone out td Australia with a
view to get in a large debt ; he did not return till
the end of 1856; and in the year 1857, so great was
the depreciation of shipping properiy, that it was
perfectly ruinous. Ships were now lying rotting in
the docks, and it was impossible to get freights.
The Commissioner—l suppose you say that 1857
was the annul mirabilis ?
Mr. Lawrance said that was certainly the case
i
with regard to the shipping nterest. The bank-
rupts had been ruined—he *mild not say by the
prostration, but by the utter collapse of that inte-
rest. Their expenditure had been within the
smallest possible limits ; the failure was wholly
attributable to unavoidable loss and misfortune.
The class of certificate ought not to depend on the
amount of assets. Such a doctrine would yield to
the greatest abuse. It might be said that the bank-
rupts had gone on too long ; but at what pe-
riod could they have stopped with greater advan-
tage to the estate ? If they had been guilty of an

error, it had been amply atoned for by their subse-
quent conduct in the twelve -months which had
passed since their failure. They had at once placed
their affairs under inspection, Mr. Swann being one
of the inspectors ; and they had since been most
actively engaged in realising their estate. Notwith-
standing the grave charges made against them, up
to that hour they had had no opportunity of answer-
ing them, and of showing that, they had done
nothing to forfeit that unblemished name which
they had inherited from their father.
Mr. Linklater (on behalf of Charles Walton) said
it was only necessary for him to trouble. the court
on a few points, which Mr. Lawrance had charitably
left open for him. (A laugh.) But for the course
taken by Mr. Sargood, the advocates for the bank-
rupts were willing to have left the case with the
court as it stood-upon the evidence ; for the whole
of the charges urged against the bankrupts had
been explained and answered by that evidence.
While the examinations were going on, the court
had several times expressed the opinion that the
matters inquired into had nothing whatever to do
with the question of certificate. Yet all these
charges were now renewed, after an interval of two
months, although the judgment of the court had
been in effect pronounced upon them, and a compli-
ment paid to the bankrupts for the clear manner in
which they had explained all their transactions.
The leader of the opposition, Mr. Swann, an under-
writer, had fully investigated the bankrupts' trans-
actions with regard to the Sarah Sands on the
failure taking place ; and the committee then ap-
pointed had reported that there did not appear to
be any reason for impeaching the sale of the second
moiety- of the ship, although they were of opinion
that the bankrupts ought to have called together
their creditors before making the sale. The com-
mittee was of opinion that a composition of 4s. in
the pound ought to be accepted from the bank-
rupts. Ultimately an agreement of 3s. in the
pound was come to, and Mr. Swann was
one of the first to sign that agreement. Every-
thing was . then before the creditors ; they
knew that the transaction was a joint one ;
and, if they had chosen to do so, they might
have prevented the transfer of the second moiety
to Messrs. Lloyd, Bielby, and Co., for it was not
then registered.* But they thought the transaction
so fair and reasonable that -they determined on
carrying it out by accepting the , composition.
Nearly all the' creditors had signed the deed, but
owing to the delay in carrying it -out, Messrs.
Walton had been advised to come to that court, in
the full confidence that they would receive first-
class certificates. It was much too late now for
Mr. Swann to complain ; he had not been heard
of from January till September, when the bank-
rupts passed their examination. It was a waste
of words to answer charges which had so little
foundation -in fact. The course of business with
underwriters was only to have yearly settlement
with the brokers ; there was, therefore, nothing of
a fiduciary 'character in these payments by the
brokers. At the death of their father the bank-
rupts had a confident belief in his solvency, and
allowed the executors to withdraw from time to
time portions of the assets of the firm. It turned
out that they had overdrawn to the extent of
£4,000; and the estate was now in Chancery, in
hopeless confusion. • Mr. Walton, sen., had been
managing director of the Royal British Bank up
to two years before his death, 'though he was not
conneeted with its irregularities. The executors
sold his shares, but had not transferred them when
the bank failed, and this led to immense litigation.
The result was, that Messrs. Walton were wholly
unable to understand the position of their father's
estate ; and it was impossible for them to have
said at any precise period- that they ought to have
stopped then. Their assets had gradually fallen
off, by one loss depreciation after another. The
father's capital 'of £21,000 was the result of a
balance of much larger figures. It was said that
Gibson had been put forward by Mr. Walton, sen.,
as a means of obtaining possession of ships. Why,
at that very time Mr. Walton, sen., had 14 ships
standing in his own name, worth at least £50,000,
and he could have discount to any amount at the
Bank of England. This inquiry had been kept
up, in the most -persecuting spirit, for the last two
months ; and the bankrupts hoped now- to receive
the judgment of the court, as all the facts were
fully before it.
The Commissioner—They shall not be kept long
in suspense. I- shall think it 'necessary to go
through the shorthand writer's notes of the
evidence, and I will then give my judgment.