The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1843-04-14 00:00:00

rd pr,AlosA, 1,14 IPP6V3O wir6 *g4o 14i>3 f4ti
Wl4 1)40-aber, 18,34, and protieeed thu followitir month.
hen they were produced, I teado royeelf acquainted with
the state of the directors' accounts. At the meeting in Janu-
ary, I spoke to Mr. Bower on the subject of bad debts. Mr.
Ashton was not present, but I think Messrs. Turner and
Palm were. I asked what had been written off for bad
debts, and I was told " nothing." After the auditing of
the accounts in the presence of Mr. Turner and Mr.
Palin, I told Mr. Bower that he ought to have stated
that the dividends of 8 per cent. in January, 1836, had
been paid out of the capital. He said it had been ; he ex-
ceedingly regretted it; it had been Mr. Grugeon's fault that
it had been done. After the bank had failed I told Mr.
Ashton that the paying of the dividends out of the capital
was the first and the worst step they had made. He treated
the matter lightly, and said it was customary for public com-
panies to do so. There was a report published in February.
Mr. Turner retired from the directory. There was a great
deal of dissatisfaction. Mr. Turner left the room. It was
at the annual meeting. The bank has been carried on since
that time for the purpose of winding it up. No dividends
have been paid since 1840. There was not any return for
capital amounting to £260,000. The officers of the bank were
all appointed by the directors. Documents called 6` states"
were sent from the branches to the bead bank. Blank forms
were furnished from the head office to the Liverpool branch
like this, in order to be filled up, quarterly or half-yearly. I
became bankrupt in 1840, after the failure of this bank.
Cross-examined by the SOLICITOR-GENERAL.—I owed
five thousand pounds to the bank for my shares, and
£BOOO or £9OOO, before a twenty-oae days' notice under the
bankrupt laws were served on me. Mine was an overdrawn
account. The greater part of my account was contracted
whilst I was a director, and arose from having given my en-
dorsement to bills. It was the manager's duty to make a
return of dishonoured bills. I have not paid any portion of
the £15,000. I have paid a dividend of 9d. in the pound,
and am an innkeeper in London. I was applied to iu the
early part of last week to become a witness. I had previously
been applied to by letter—three weeks ago. Mr. Macardy
has been staying at my house, but we did not come down to
together. I was appointed director in 1837, and was, of
course, one of the general board of directors, and knew my
duty as a member of the board. It was not our duty to ex-
hibit a sum of money of the balance sheet for the half-year
under the 56th clause. It was the duty of the board of
directors to recommend to the proprietors the amount of the
dividend. The first meeting I attended for declairing
a dividend, was in February, 1838. It was in February,
1838, that this statement of the assets and liabilities
was produced. I will not swear that statements of
assets and liabilities were or were not produced at the gene-
ral meetings. Sometimes one paper was produced, and at
other times two. I cannot say whether I concurred in as-
senting to the report without a statement being produced of
the assets and liabilities. This paper shows the amount of
dishonoured bills and current account. In February, 1838,
I concurred in the report and the dividend. The signature
to this report is Mr. Smith's, the accountant, but the body
of it is not his. A statement was always produced by the
manager, or managing directors. The board of directors had
only this paper, and the profit and loss account lying before
' them, when they made a dividend. Also half-yearly state-
ments from the branches, but not from the head bank. The
weekly accounts were also there. The report which was
placed before the shareholders contained the sums to which
'reference is made in the report. At the meeting in July,
1838, (at a board meeting,) I did not propose, and Mr. Tur-
ner did not second, a reverse that eight per cent. should be
divided. At that meeting I proposed another dividend,
and Mr. Ashton opposed it. Mr. Turner also opposed my
proposition. I concurred in every dividend proposed. I
did not believe that I was making a false statement. The
board of directors trusted implicitly to the accounts furnished
by the officers of the company. We did not make any fur-
ther inquiry or examination. The Manchester directors
would not allow us to inspect the bank books. We did
not like to do anything contrary to the will of the Manches-
ter directors. It was uo use me making any proposition in
1838, with regard to the examination of the books, as the
board was against me. Neither Mr. Turner nor Mr. Ash-
ton opposed my doing so. Mr. Bower did nearly all the
talking department. Mr. Ashton was present at more than
one dividend meeting. He was present on the 31st of July,
1838, when the dividend of 7 percent. was agreed upon. Mr.
Ashton proposed that it should be reduced to 6 per cent.,
and Mr. Turner seconded it. I voted for the larger divi-
dend, and so did the majority of the local directors. They
were outvoted on the small sum, and we carried the larger.
I was anxious to raise the price of shares. In February,
1539, Mr. Turner, of Chester, proposed, and I seconded, a
7 per cent. Mr. Ashton supported a smaller sum. We beat
him by seven to six. On the 6th August, 1839, Mr. Edge
moved that the books of the head bank should be produced
at the next meeting, and it was carried. Neither Mr. Ashton,
nor Mr. Turner, nor any one else opposed it. At the next
meeting they were produced. Mr. Edge and Mr. Preston
audited the accounts which were produced, and after they had
done that the last report was made to the shareholders. Mr.
Edge and Mr. Preston concurred in the dividend and report
sanctioned at the meeting of the sth February, 1840. Mr.
Turner did not take any particular part. A sum of money
was proposed to be expended by the bank in the purchase of
shares at the meeting in April, 1840. Ido not recollect thst
it was £lO,OOO. That was for the purpose of raising the
price of shares. Ido not recollect that Mr. Turner objected
to it. After that resolution was passed I do not recollect
that he said he would not have anything more to do with the
company. I cannot recollect that he did not. A committee
was appointed for the purpose of expending the money in
the purchase of shares. Mr. Grugeon was manager in 1836.
I do not know of my own knowledge who prepared the re.
port of 1836. I have been told by the author ; but this
author was neither Mr. Ashton nor Mr. Turner. No one
was present at the conyersation between Mr. Ashton
and myself. I took the first hundred shares that were
bought in Liverpool in 1834. I did not buy them in
consequence of the report of 1836. In April, 1838, the
shares began to fall. I did not propose a scheme then for
raising the price of shares. Those letters are my hand
writing. Before the month of April, 1840, I had bought
1000 shares for the company. I was ordered by the directors
to purchase them. I was ordered by Mr. Bower. I have
letters to that effect from Mr. Bower, but they are in the
possession of my assignee. Mr. Bower knew the state of
my accounts every week. I have frequently been at meet-
ings of the board of directors, when Mr. Holt asked Mr.
Bower about the over-due bills. I do not recollect Mr.
Holt asking whether the surplus fund was sufficient to meet
all the bad debts. I remember Mr. Bower referred him to
the manager who knew all about it. Mr. Sewell said the
surplus fund was sufficient to meet the bad debts. I cannot
exactly remember whether it was in 1838. I was present in
June or July. 1840, when Mr. Edge proposed a vote of
thanks to Messrs. Ashton, Slater, and Turner. I concurred
but 1 tifink they declined..
Re-examined by Mr. MARTIN.—There was a mort-
gage upon a freehold security for the amount of the
bills, but I understand that the property has not
fully realised the amount. I gave a cheque upon
the bank for the amount of my last shares, and I re-
ceived the interest upon those shares. I met the defendants
at several more board meetings besides those I have men-
tioned. By a clause in the deed of settlement, the Manches-
ter directors were to go out in three years, and we had seve-
ral meetings about that. At the time I proposed the larger
dividend, 1 was not aware that the dividend of 1836 had been
paid out of the capital. I had no idea that there had been
13,000 shares appropriated upon cash credit to the directors
in June, 1834. I had not at that time any reason to believe
that the accounts laid before me were false and fraudulent.
I supposed that the documents laid before the meetings ex-
hibited a fair statement of the affairs of the bank. There
was a large amount due to the Birmingham branch from the
Tipton company. I have heard from Messrs. Bower, Ashton,
Palin, and Turner, that there would be some heavy bad
debts at Birmingham. I have heard them say that the four
defendants, Thomas Slater, James Grugeon, James Savill,
manager, a Mr. Partridge, and Mr. Henderson. I have
never heard Mr. Turner or Mr. Patin speak about the Tip-
ton company. I never heard them say what the Tipton
company owed the bank. When I proposed that the
account should be audited, the other defendants were
sitting around Mr. Bower. It was evident from their
manner that my proposition was not agreeable but they
said nothing. I wished to know if it was a proper
way of doing business to audit the account first before
declaring the dividend. I heard a few days before I bought
my shares that there would be a good dividend. The three
letters which the Solicitor-General showed me were written
to Mr. Bower—one to the board of directors. Mr. Palin
was one of the parties appointed to buy shares. I believe
that he gave Mr. Turner £3 10s. per share. The price of
shares at that time was below par. I bought a thousand
shares before this proposition of the board, by direction of
the Manchester board. Mr. Bower gave me directions to
buy them. That was before the committee was appointed.
I bought the shares at £1 discount. That was in 1838 or
1839. The surplus fund in 1839 was £9,000, and £26,000 at
last, but there was not a farthing of this surplus fund forth-
coming when the bank broke up.
Sir W. FOLLETT objected to this sort of evidence—the
accounts ought to be produced.
The bad debts were never written off, and it was impossi-
ble to know anything about them. I heard this from the
manager, and also from Mr. Bower. It was after the stop-
page that the vote of thanks was given to Messrs. Bower,
Ashton, Turner, and Slater.
The SOLICITOR-GENERAL asked his lordship whether be
was not at liberty to call on the counsel on the other side to
say upon which of the counts they were proceeding against
each of the defendants. In a joint action imputing fraud
against four parties, some of whom were not present at some
of the transactions, he thought he had a right to ask it.
r. JU STICE COLTMAN said this was not the proper time.
The SOLICITOR-GENERAL requested his lordship to take
a note that he had made the application.
Robert Turner. an agent and a proprietor in the bank,
said he became a director of the Chester branch in 1837, and
remained so till the close. Attended the meeting on the 3rd
February, when Mr. Bower was in the chair; and he con-
gratulated the proprietors on the prosperous state of the
bank. The report was read, and a copy sent to the different
branches. I was afterwards sent for to the head bank at
Manchester, when the four defendants were present. They
desired me to go to Ludlow to open a branch, if 20 share-
holders could be found to take 500 to 1000 shares at £2 pre-
mium (being £7 per share), then they would agree to open
a branch at Ludlow. I went to Ludlow, and called a meet-
ing at an inn there, and read to them the copy of the report.
An application was made to me that evening for six or eight
hundred shares. I returned to Manchester, and received
the thanks of the directors. I attended all the meetings of
shareholders from the beginning, and the hoard from my
appointment. I never was shewn the books of the office at
'Manchester. but I did not ask to see them. Mr. Hebble-
white requested to see the books, and I concurred with him.
Mr. Bower said such things were left to paid clerks. Some
time before the bank stopped, we wanted to know what was
the amount of the bad debts and past-due bills. Mr. Bower
said, as chairman, he could not tell. Either Mr. Turner or
Mr. Ashton said the best way was to ask the manager. At
a subsequent meeting they said there were no bad debts.
That was in 1839. Messrs. Turner, Ashton, Bower, and
Palin were there. Hebblewhite asked if they had made al-
lowance for past-due bills and bad debts. Mr. Bower said
" No," loud enough for the other gentlemen to hear him.
I am sure Mr. Turner and Mr. Bower were there. I cann
swear that the others were present, but I believe they
were. Mr. Hebblewhite, at one general board, when all the
four defendants wero present (1 am not sure about all; I re-
member Messrs. Bower, Turner, and Palin were there) after
the audit in 1839 (the early part of 1810), asked if the first
dividend had not been paid out of the capital. Mr. Bower
said that was the first false step the bank bad made—paying
the dividend out of the capital. Messrs. Turner and Patin
assented to this. They all said it was a bad business. I
owfasßnionit,aitngtaernm,eewtainsg of
tour
prestehe ntb.oard Thein whendefe
n di‘al
t. s
were Edge,
there. Mr. Edge objected to the surplus fund being men-
tioned vvlien there was none. Mr. Edge said, in the pre-
sence of the defendants, I am not sure if Mr. Ashton asked
about the over due bills which it appeared amounted to
£70,000 or £BO,OOO. He issued reports, and I joined in the
appropriation of the cash credits. I had a share account and
a trade account. The latter was generally in my favour.
The other was against me to the extent of £l5OO or £2OOO.
I had not been told before that the dividends had been paid
out of the capital.—Cross-examined by the Solicitor-
General.—l held 600 shares, which were allotted to me, for
the greater part of which I paid. I heard that they were
allotted to me in 1834. They were allotted to me at £5 Is. ;
that would be £3OOO. I paid the manager £250, and £1250
when the bank opened at Chester. The remaining £l5OO
was credited to me on my share account, and I owed £l5OO.
I dont recollect drawing one cheque for the £1500'; but I
will not say that I did not. I paid off the £l5OO by instal-
ments. I was charged interest for the £l5OO from the 2d
June, 1834, ou the share account, for about two years. lam