The Sun.
London, England, 1859-12-06 00:00:00

EDINBURGH AND GLASGOW BANK.

ACTION AGAINST SIR WILLIAM JOHNSTON AND
OTHERS.

The Mall publishes the defences of Sir William
Johnston, of Kirkhill, Knight, iu the action at the
instance of John Cullen, Writer to the Signet,
against the said Sir William Johnston, and also
against Thomas Thomson, W.S., Edinburgh ; Wm.
Thomson, of Balgowan, Perthshire ; James Bonar,
W.S., Edinburgh ; and the Rev. John James Bonar,
minister of the Gospel, Greenock; trustees and
executors of the now deceased John Thomson, some-
time manager of the Edinburgh and Glasgow Bauk,
Edinburgh ; and Charles James Kerr, accountant
in Edinburgh, sometime secretary, and thereafter
joint manager of the said bank. The defender's
anwers to the pursuer's condescendence consists
mainly of denials of the statements set forth
therein, with reference to the defender's statement
of facts.

DEFENDERS' STATEMENT OF FACTS.
I. The defender became a shareholder of the
Edinburgh and Glasgow Bank in 1845, when he
acquired 150 shares. He afterwards in 1816, ac-
quired other 350 shares, so that in the year 1850 he
was proprietor of 500 shares; which amount of
stock he has held ever since, without increase or
diminution. He never offered to sell, or intended
to sell any shares in the Bank, whether belonging
to himself or others, io any person whatever. His
two brothers also are holders ; the one of 300 shares,
and the other of 368 shares in the said Bank. The
defender's own shares and those of his two brothers,
have cost them about £lO,OOO.
11. In or about the year 1849, the defender was
solicited to become a director in the Bank, and he
agreed to accept the office. Accordingly, the de-
fender was then elected a director, and he continued
to be a director till 1858. Some time after the de-
fender's election as a director, he was appointed
chairman of the directors, and he held this office
for some years.

111. The contract of copartnership of the Edin-
burgh and Glasgow Bank is dated 29th February,
1844, and various other dates. A rood many of the
articles of the original contract were from time to
time altered by resolutions of the partners, in terms
of and under powers conferred by the contract it-
self. In particular, such resolutions and alterations
were made on 22d March, 1549, on 6th
February, 1851, on sth February, 1852,
on 3d February, 1853, on sth February, 1857, and
4th and sth February, 1858. The contract of co•-
partnery, with the various resolutions altering or
varying the same, is specially referred to, and held
as repeated. The whole alterations were effected
in due and competent form, and were legally bind-
ing on the whole partners of the company. The
present pursuer assented to the contract, and to the
whole successive alterations thereon.

IV. The contract of copartnery is referred to. A
great variety of powers arc conferred upon the di-
rectors by the contract, and large discreti3nary
powers are entrusted to them in relation to the
conduct and management of the affairs of the bank,
for all which reference is made to the contract
itsel f.

V. The duty of the directors was to afford their
advice on whatever matters might from time to
time be submitted to them by the manager, secre-
tary, or other officers of the Bank, and to give direc-
tions regarding the general management of the
Bank affairs. The whole details of the management,
however, were always and necessarily entrusted to
the manager, secretary, accountant, and other paid
officials of the Bank. The directors were not ex-
pected or required to make themselves conversant
with the whole details of the Bank's business. To
have done so would have required au amount of pro-
fessional skill and an expenditure of time which
none of the directors were either asked or expected
to give, as the nature of the remuneration given
suffkiently showed. This was perfectly understood
by all the partners and was and is the practice in
other banks, and in allpublic institutions of a simi-
lar description.
VI. By the contract a small allowance was made
to the directors, as an acknowledgment for their
trouble. This allowance was latterly fixed at £lO
per week for the whole directors, and was in prac-
tice divided among them according to the number
of meetings they respectively attended. The whole
amount received by the defender never exceeded on
an average £4O per annum. If the defender had
been required to master and keep himself informed
from time to time of the whole affairs of the Bask,
this allowance would have been absurdly dispropor-
tionate to the labour and skill required, and neither
the defender, nor any one else, would for a single
moment have undertaken such a task. Nothing of
this kind, however, was exer required or expected
of the defender.

VII. The defender accepted of the office of direc-
tor on the footing above explained, and in reliance
on the clause of indemnity which the contract con-
tained, lie never, however, was a leading member
of the direction ; he never was a member of the
committee of directors, to whom the board of direc-
tors confided the more immediate direction of the
Bank ; he never was a member of any committee
which prepared the quarterly or annual states, from
the time he entered the direction until the last
year of the Bank. The defender was Lord Provost
during three years of the time when he was (Erec-
tor ; and from this and numerous other public calls
upon his time, he knew less of the affitirs of the
Bank than many of the other directors.
VIII. For the full history of the defender's act-
ings as director, the defender is obliged to refer to
the books, minutes, and records of the Bank itself
to which at present the defender has no access. lie
had no reason to doubt the accuraby of the states
and reports which were prepared, and he acted
on that footing. At other times he was absent from
Edinburgh, sometimes for considerable periods. lie
was in Italy when the circular of Gth May, 1858,
was issued—be had been there for weeks before—
and he did not return to this country until some
weeks after its date. He never was consulted in
relation to that particular ; he never was asked, or
had any occasion to approve of it, and he never even
saw a copy of it until November,lBsB,long after the
bank had ceased to transact business. So, in like
manner, with many of the reports or states to which
the pursuer refers, but to which, in the absence of
the minutes, the defender cannot more particularly
refer.

IX. Everything done by the defender as
director, or in relation to the affairs of the bank,
was done in optima fide, in the honest discharge
of the defender's duty, without any design of
advancing the defender's own interests at the
expense of any one, and without any motive
excepting fairly and honourably to promote the
interests of the bank, which were identical with his
own. From time to time the defender did rely,
and necessarily required to rely, on the statements
and information furnished to him by the paid
officials of the bank. He had no reason to doubt
the truth of these statements, which had been
passed and approved by previous boar 2 of direc-
tors, and by the shareholders, before the period
when he himself became a director. On the con-
trary, he had every ground for believing that they
were correct ; and upon these statements, to a large
extent, the defender's estimates and calculations
were based. His expectations have been disap-
pointed in many respects, but for this the defender
is in no way to blame. He is himself, as well as
his brothers, a severe sufferer, nor has he, directly
orindirectly, attempted to throw any part of the
loss upon others by disposal of any portion of his
shares, or in any other way.
X. and XI. State that the pursuer has been from
the first a shareholder in the Edinburgh and Glas-
gow Bank, and was present at various meetings of
the company ; and that from 1844 to 1858 he had
full means of making himself acquainted with the
position of the company.
XII. After it was found necessary to wind 'up
the business of the bank, and to transfer its whole
assets and liabilities to the Clydesdale Bank, in
June 1858, the pursuer was one of the shareholders
who approved of and concurred in this being done.
The pursuer was present at the meeting of part-
ners, hold on the 10th June, 1858. He moved an
alteration in the articles of agreement between the
Edinburgh and Glasgow Bank and the Clydesdale
Bank ; and the alteration which tire pursuer pro-
posed was agreed to. At this meeting certain
parties took a protest, reserving their chums against