The Sun.
London, England, 1868-02-19 00:00:00

FALSE REPRESENTATIONS.

The Lord Chief Baron and a special jury have been oc-
cupied in the Court of Exchequer for several days in
hearing the case of Crossley v. Elworthy, in which heavy
damages were claimed. The action was brought by Mr.
Joseph Crossley, of the firm of Crossley Brothers and
Co., carpet manufacturers at Halifax, against the defen-
dant, Mr. Frederick Thomas Elworthy, on account of
certain false and fraudulent representations made and cir-
culated by him publicly and privately in relation to the
affairs and prospects of a company called " The London
and Colonial Company," and in his capacity of managing
director of the said company, whereby Mr. Crossley was
induced to take shares in the company to the extent of
£50,000. The London and Colonial was started in the year
1859, principally by the defendant and his friends, for the
purpose of purchasing and carrying on the business of
Mr. Robert Tooth, who had been a hop merchant and
brewer at Burton-on-Trent and Woolwich. The nominal
capital of the company was to be £150,000, divided
into £lOO shares, and the purchase-money paid to Mr.
Tooth was £60,710. However, of that amount £45,000
was received in shares of the company, and £15,710 in
bills, but which were ultimately redeemed. Notwith-
standing that large dividends were announced, the com-
pany must always have been working at a heavy loss. In
the summer of 1865 the directors were anxious to raise
fresh capital ; and as Mr. Elworthy, the managing director,
had become somewhat intimate with Sir Francis Crossley,
M.P. for Halifax, through their being joint trustees under
the will of the late Mr. Kershaw, member for Stockport
whose daughter Elworthy had married, application was
made to Sir Francis by the defendant to become a
shareholder. Although Sir Francis declined to do so,
he referred the matter to his brother, the present plaintiff,
Communicating to him the favourable representations
which Elworthy had male respecting the company and its
affairs, and, above all, that it had been working most suc-
cessfully for a period of six years, and that the shareholders
had earned a uniform dividend of 12 per cent. Shortly
following on these representations was issued the pro-
spectus of JulylB6s, announcing: "The large and growing
aemand for Burton ales at home and abroad can only be
met by a greater supply ; and one of the valuable inci-
dences of this company is that, by a very moderate outlay
on the existing plant, it will be at once capable of doubling
its present production without any further expense in
management, and with very little increase in the cost of
)hour." Now this announcement was set forth at a time
•hen it either was, or ought to have been, thoroughly
known to the directorate that their ales were a perfect glut
in the colonial market—that their branch, in consequence
of the bad quality of their ales, was in general disrepute,
and that the losses upon consignments abroad had been
enormous, amounting for the previous year alone to
the sum of £33,000. Relying upon the statements thus
privately and publicly made, Mr. Crossley, the plaintiff,
applied for and obtained an allotment of 500 shares of
£lOO each, and upon these he paid up at once £25,000.
He received two dividends, amounting together to £2 200 ;
but at the end of about a year and a half he had come to
the conclusion that the company was hopelessly rotten,
' and accordingly, upon his petition, it was ordered to be
wound up in March 1867. Since the order for winding-up
has been issued, the creditors have received 7s. 6d. in the
pound, and Mr. Crossley has paid a sum of £lO,OOO on
calls made by the liquidators. At the same time he re-
mains liable for further calls to the extent of £15,000 ;
while his actual payments—independently of the loan of
£6,000 to the defendant—amount to £35,C00, the sum
covered by the verdict of the jury. The plaintiff's case
is, that, although himself a man of business, he had
made no effort to verify the statements put forward by the
defendant. He had placed implicit reliance on those
statements, and embarked in the speculation accordingly.
It had never for a moment occurred to him that the pro-
spectuses, the balance-sheets, and the reports of the
directors could be false and illusory, that fictitious divi-
dends should have been declared, that consignments
abroad should have been represented in the assets of the
company as worth £207,000, when it was well known to
the directors that bills had been drawn against those
incon-
signments to the extent of £130,000, and that theirl
voiced value was immensely in excess of their realvahuaeve;
likewise, that a guarantee fund of £35,000 should
fits
at
been transferred in the balance-sheet of 1865 to pl
and, lastly, that there should have app
representing
might
The
de-
fendant iisningtheosssaems e;
assets connected with a fire which had occurred on the
laialpaennc.eod-shweehtenantehnetrcyomoranysumwasof o:3loy:ooarrOeea:d
afterand thwehificrhe.
had embarked a sum of £lB,OOO in the company,
company'spresumed t
ep
be
ee m ises
salvageat
remainingWoolwich,
but, on the other hand, he had drawn out of it, including
the £6,000 advanced on loan by the plaintiff, a sum of
£41,000, and without taking account of £l,OOO a year,
which he received as managing director. It was admitted
that he had no special qualifications for such a position,
that he knew nothing of accounts, and that he knew
nothing of brewing. And it was likewise elicited that,
although the beer and ales consigned abroad were
wretchedly bad, the prices invoiced were those of Bass
and Allsopp. In the course of the defendant's cross-
examination he admitted that a sum of £30,000, which had
been lost to the firm by a fire, was brought to the assets of
the company in the balance-sheet of 1866. A dividend of
10 per cent, was declared on that occasion, but such a pro•
ceeding could not be justified. The jury, after a quarter
of an hour's deliberation, returned a verdict for the plain-
tiff ; damages, £35,000.

FIELD-MARSHAL SIR JOHN Bu MOYNE. —Amotion
about to be made in the Court of Common Council, by
Mr. J. E. Saunders, to the effect that the freedom of the
City be presented to this veteran officer, in a gold' box of
the value of 100 guineas, in recognition of the distinguished
services rendered by him to his country during a long and
useful professional career, and congratulating him on the
well-merited honours which her Majesty has been gra-
ciously pleased to confer upon him.
SERIOUS LANDSLIP IN MANCHESTER.—A lana-
slip lately occurred at the excavation now being made at
the site of the new Exchange, Market-street, Manchester.
Three labourers who were engaged at the work were par-
tially buried. Two of them—John Royle, 28, and John
Walton, 53—were taken to the infirmary in a cab. The
former was found to be suffering from contusion of the
thigh, and the latter from contusion of the lower ex-
tremiti,s. The third man only received slight bruises.
Itoyle and Walton, who were not seriously injured, had
their wounds dressed, and will soon be able to rime
Wo*,