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    bank as a shareholder , that he would bo a bankrupt . That is proved beyond all manner of doubt ; and if these transactions , proved in a public court of justice , are not Sufficient in a town like Liverpool to warn people of th e consequences of getting into these concerns , nothing will do it . I have thoug ht it right to make these observations to yon , because it appears on the face of these transactions beyond all doubt that that was so ; and , if anything can be a warning to people , that ought to be a warning ; and , if it is not , anyone who deals in such matters as these afterwards must take the consequences on his own head . Now , to entitle the

    plaintiff's to your verdict , they must establish two propositions—that the report which was made in July last ¦ was a false report , that is , untrue , contrary to the truth ; and , further , not merely that it was false , but that it was fraudulently made , and with the intention to mislead and deceive , for the purpose of maintaining an action of this kind , both these matters are essential . The circumstances of the report itself , not being true , would not be sufficient for the purpose ; there must be ; further , that it was done with a fraudulent intention , for the purpose of misleading these people ; Both these matters are essential to the maintenance of this action . Affain ,

    they must further satisfy you that this statement if false and deceitful , was made with the object to mislead them ; and that is a matter to which I will now call your attention , as being the least important in the case , ; but still one upon which you are called to decide . A report was made from the directors to the proprietors . It was , therefore , primarily directed to the proprietors , and primarily intended for them ; but if you believe the evidence of Mr . Tiriley , that any person who went to the bank , or any broker who dealt in the shares of this kind who went to the bank , could get a copy of this report , obviously for the purpose as a broker of exhibiting it to people who were likely to deal in these shares , it will be for you to say , supposing you are satisfied that this was

    primarily meant for- the- proprietors , whether it was not meant for the consideration of any persons who wished to make themselves masters of the affairs of this bank ; and if you are of that opinion , then it would be a publication-to them—it would . be a document issued , and a ddcjmient issued in the sense that any one wishing to dggiQ in the shares of this bank could obtain it with a view of acting upon it . But that depends altogether on the evidence of Mr . Tinley . That both these men did aet upon it ( no comment has been made upon that ) there is very little doubt , f » r they get a copy of this report from their broker , Mr . Byrne * the plaintiff puts his initials upon it the same day , and no doubt can be cast upon . that . That is the first and a very immaterial matter in this case , of which I will say nothing more at present , but will proceed to call your attention at once to what is the real matter . Now , gentlemen , the evidence of the plaintiff was , no doubt , as has been observed by the Attorney-General , very extraordinary ; for in reality the whole of his case , so far as regards the real question in dispute , depends upon written documents . The first document which was put in evidence is the report of the 28 th of July , 1857 , which is the report in question . Then we have in evidence a speech of Mr . Dixon ' s , which he made at a meeting in February last -, and then follow two documents , being a report of Mr . Banner ' s , and the proceedings at another meeting in the month of February . By this time , I have no doubt from what has been stated by the learned counsel for the plaintiff , you are aware that this case depends on the existence of the facts upon the 28 th of July , and that all these subsequent matters have really very little to do with it ; and if you were to make any inference from the statements contained there by Mr . Banner and others , the impression rather would be in , favour of the defendant , because % think you cannot have heard that report read without thinking that no personal blame rests upon anyone . But really that is so much beside the question , that I -will not trouble you further with it . It eeems to me that the case lies in the narrowest compass that a case ever did lie in . It rests upon the true meaning of the document that was published on the 28 th of July , and on the account which you have in your hand , that was furnished by , Mr . Smith , and the , evidence pf . the defendant himself , and the fair inference ^ fjtffiTit . The . whole of the case rests there : you may dismiss for the purpose of this case the whole of the long reports which have been read to you;— they relate to a state of things which was discovered afterwards , and which there is no reason to suppose Mr , Dixon was acquainted with at the time ; at all events there is no evidence of it ; and you are to try this cause upon tho eyidenco before you , and not upon surmise of any sort . So far . as the evidence goes , it is directly the contrary . Therefore you will dismiss that from your minds at once . The report is this : — " Liverpool Borough Bank , " r— 'the directors are named , and it is " Report of the JQtoe&tQrajtojttipJto vfltlons on that as to the other part of the ease , and will not repeat them . " According to the last report , the paid-up capital of tho bank was 900 , 000 / ., and tho reserve fund wofl 101 , 775 / . 10 s . lid / ' No doubt that is truej there is no . evidence to tho contrary ! '' Since that daje two calls of 1 / . per share have been pa | d upon the rifevr shards , making the oupitul 1 , 000 , 000 / . The net profits of the past voar , after payment of all ex-

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    penses of management , and after deducting 45 , 825 / . 2 s . Id . for losses by bad debts incurred during the same period , amount to 69 , 318 / . 12 s . 8 d . "^—that is also quite true , — " appropriated as follows :- ^ 3 £ per cent , dividend upon 950 , 000 /; , 33 , 2507 .: 2 * ditto upon 1 , 000 , 000 / ., 25 , 000 / . ; property-tax paid by the bank , 36297 . 6 s . 8 d .: totalV 61 , 879 / . 6 s . 8 d . Balance carried to Reserve Fund , 7439 / . 6 s . " No doubt that is quite correct . " Nearly the whole of the losses above mentioned have been caused by the frauds of a customer . In winding up the affairs of 1854 , a year which it" is well known was most disastrous to those customers . of the Bank who were engaged in the colonial shipping trade , heavier loss has been sustained in the realisation of the assets then

    taken over , by way of security and in the liquidation of estates then considered good , than could possibly have been anticipated ; " Some comments have been made in the opening , \ vhich were not repeated in reply , by the learned counsel for the p laintiffs upon that , although I dp not think they were well founded ; because if any misconception were likely to arise upon that , it was clearly corrected by the two first lines in the following paragraph : — " The directors have thought it their duty at once to reduce the dividend to the rate of 5 per cent , per annum , on the grounds that , taking even the most favourable view of the liquidation of these accounts , the whole of the reserve fund will be required to meet the losses incurred ; " which shows that the accounts were

    not liquidated , but were in the course of liquidation — " and that , on the other hand , taking the most unfavourable view consistent with probability , the good current business of the bank will , in their opinion , be sufficient to admit of the regular continuance of the dividend , without encroaching on the capital at the same period in the coming year . " Now , there it is said there is a misstatement , and a fraudulent mis-statement , and if you read this correctly and . accuratel } -- you will see that what is there really stated is , that in the opinion of the directors there would be sufficient to admit of the actual continuance of the dividend , without encroaching on the capital in the game period of the coming year , and undoubtedly that statement is a statement , that we

    expect in the next ensuing year there will be no necessity to encroach on the capital , if the profits are continued ; and , according to the evidence of Mr . Dixon , there is nothing to contradict that that is so . But then it is said that that statement would induce an } ' one to suppose , that the then present dividend was not taken out of capital ; and that is where the supposed sting of the matter is . You will find , in one moment , that the rest of the report would certainly not induce any one to purchase in this company ; because it says , "In laying this statement before the shareholders , the directors desire strongly to impress upon them that its unsatisfactory character is to be attributed to the affairs of 1854 ; and that , apart from these , the sound and

    legitimate business of the bank would have enabled it to pay the ordinary dividends , and also to add largely to the reserve fund , notwithstanding the losses that have been incurred subsequently to that year . " Undoubtedly the evidence is that that is correct . " They wish also to state their confident expectation , that the change they are making in the policy and regulations of the bank will effectually guard against the recurrence of similar results . Mr . Smith having stated to the directors that his health would not longer permit him to undergo the labour of conducting the details of the manager ' s duties , and having in consequence requested to be relieved from his office , they have with reluctance complied with his wish , and have made arrangements that Mr . Thomas Scllar " trouble

    —Then there are other matters which I need not you with . I should expect that Mr . Sejlar would be a very competent person indeed ; and it is perfectly obvious that the plaintiffs , in purchasing these shares , were in some degree influenced by the circumstance that Mr . Sellar had beqome the manager of this bank . The other evidence , on tho part of the plaintiffs , for the purpose of satisfying you that this was a false and fraudulent account , consists of a speech made by Mr . Dixon at a meeting in February last , of which you have a copy , and to which I will very shortly call your atten . tion- Now , the first matter which . appearain . this speech ^ and which is indeed confirmed by Mr . Dixon on his oath , is that he in reality , although a Director for some years , knew nothing whatever of tho concerns of this bank up to tho beginning of tho month of July ; the report was made on tho 28 th of

    tliat month [ and he ] states that whfttevor information ho got , ho got it during tho month anterior to that time . Now , you will see that the earlier parts of this speech , beginning at pages 18 and 19 , have very little to do with the matter , but relate to a matter that doeB not touch it . Tho real point which does touch upon it is about one-third down in page 20 , beginning " Towards tho end of Juno last ;" ¦ and if you have got XliwUboftfr , o ^ , ou , ^ you . vv . ilUlna ^ thQW ^ AnCT JjjMi ^»^ t . > I ] A t- tors— " Towards tho end of Juno last , Mr . Cross called upon mo in London , and statod that Mr . Smith wna going to resign , and that Mr , Sollar was to take his place , and ho asked irio if I would become ft manuging dlrooior . I assented . Immediately on my return to Liverpool my first ntop was to Inquire into tho condition of tho bunk with respoot to tho declaration , or non- ' declaration of a dividend . Tho statement of tho ftfTuira

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    of the bank laid before me by Mr . Smith led me to the conclusion that no dividend ought to be declared . " That is the document which I now hold in my hand , to which your attention has been most fully called , and which you really are much more competent to understand than I am . But there are one or two observations that I should like to make upon it , especially on those items which are scored through . You will find that there are s 6 me items that are scored through . I will not go over what was stated very clearly by the ' defendant himself ; but you Svill just observe that the debit of the bank is made 400 , 000 / . I apprehend that in a

    concern of this kind Mr . Smith was not at all wrong in taking off sundries for contingancies—that is , that the bank might be losers to the extent of 35 , 500 / . beyond 334 , 000 / . I think it is not at all likely to be a wrong estimate , that if they had gone wrong to the extent of 334 , 000 / 1 they might be behind 35 , 500 / . more , which they did not know of in consequence of the magnitude of the account . But an observation has been made by the learned counsel as to that 30 , 000 / . The defendant tells you that he thought this 30 , 000 / . was unfairly put there as a loss , and I do not think he is wrong in . that ; because if there was an actual contract to sell these

    steamboats for 90 , 000 / ., unless there was some reason to suppose that he was wrong ( nothing like that appears ) if they were not sold there might be a further loss of 30 , 000 / . ; but if there was a contract for 90 , 000 / ., it would be hard to say that a man making an estimate of the affairs of the bank should not fairly say why not take credit for the 90 , 000 / . ? That would make the debit of the bank 400 , 000 / . On the other hand there are undivided profits , 25 , 000 / ., and this suspense account , 113 , 000 / . You have heard what the nature of that was—that it was debts owing to the bank which they did not choose to consider as certain , or which they had put as debts due to them , which were otherwise uncertain , as they considered they had a right to put the one in rail

    against the other . And I have frequently , seen - way accounts this suspense account , but I did hot know what it meant until I was enlightened upon it here today ^ Here it is ; you are much better acquainted with it than I am ; and you will be able to say whether it is a proper item to go into this matter or not . Then there is profits to the 30 th of June , 75 , 000 / . " No doubt that is true . Then there is an actual reserved fund of 102 , 000 / . No doubt that is true . These sums together would make 380 , 500 / ., which would show as against the 400 , 000 / ., which if the 30 , 000 / . were off would make 380 , 000 / ., against 370 , 000 / ., or if the 30 , 000 / . were lo stand , would make 20 , 000 / . of deficiency . Then there was added another item by Mr . Smith—" Forfeited shares 65 , 000 / ., " which is so , I suppose , in point of

    . . Mr . James : —I beg your lordship ' s pardon , it is 315 , 000 / . Mr . Baron Martin : —I beg pardon , I was considering the forfeited shares . Mr . Edwin James : —Those are struck out . Mr . Baron Martin- —Yes ; but I nm speaking of the account which the gentleman had to deal with . Gentlemen , you are to consider the state of Mr . Dixon ' s mind at the time , and you must take the information that lie had , and give a fair and liberal consideration to it . It is not as the thing afterwards turned out , but you must give a fair and liberal consideration to his state of mind at that time , when you are trying a question of this

    -description ; " Forfeited shared , C . 5 , 500 / . ; " that is , 1 presume , there were shnrcs standing forfeited by shareholders , which they hnd not paid up upon , and which they had a right to dispose of : and if they sold thorn at par , those shares at 10 / . would have realised 05 , 500 / ., which they might do for the purpose of making the shares complete . That makes tine aum of 380 , 000 / . There was then profit for the coming year , 120 , 000 / , ; and then there was a tloduction for the dividend , at fivo per cent ., 70 , 087 / . ; leaving a balance of 49 , 913 / . ; and that would put a sum of 430 , 413 / ., as against thia

    400 , 000 / . ; and there was the account struck by Mr . Smith , deducting tho 400 , 000 / ., leaving , ' ) 0 , 413 / . as u reserve , after paying tho 5 per cent , dividend . It ia quite obvious , th , « t that was , the statement which wus put before the defendant , on which ho imd to oxorcisd his judgment , and that tho estimate which Mr . Smith put before him was thar , after paying 5 per cent , on tho ensuing yoar , there would remain a sum of 33 , 000 / . surplus beyond that . 1 have boon spoiling over it to-duy , and tho only objection I see to that is , that it scorns to me ho loaves short ono dividend for half a yoar , ami if

    that was there , it would bo , so far as tho estimate goes , correct , It seems to mo , but I may bo wrong , that thoy seem to make a provision for throe half-years' dividends , while 6 nly two are mentioned hero . Boyond that , I sco no observation to muko upon it . That is what wus placed in his hands . Ho goes on to say , — " Thla view of yj yfl c ftt jo , waa [ .,. a ^ cn t ed ) , ^ q , jft ^ . ft . "JWVMW 11 wn .. ° i Directors ; but nt a mooting aftw con " vonod , tho decision was reversed . " Mr , Woodward says - — "By the whole of the Board , or by part ? " Mr . Dixon says- — By tho Board , and to which I yiolUod , the motive being that If was very dangerous , In tho then position of tho bank , to run the risk of tho oxoUoinont that might bo produced by tho non-doularution of u divl clond . It might have resulted in a run , uncl tho fltop-

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    ¦ '¦ ^ - " r ¦¦<¦ '¦" ' : ' ¦¦ , ¦ ; . ; : 'N . . - ¦ ' ¦ ; . - ¦ . -: . ¦ , . ¦" .. ¦¦ ¦ ¦ . ' .. ;¦ : ¦ ¦ ¦ ¦ ¦ - ' . ' . ' . ¦ ' V' ' "¦ ¦ " ¦' ' ¦ " \ . ' . ¦ - . ' ' ' . '' ¦ ' ' / . ¦ . ¦ ' ' ¦ ' , ' Qqti ' .. '¦ /*• THE IiEADEE . [ No . 4 MS September 25 , 1858 ,

• Citation
  • Leader (1850-1860), Sept. 25, 1858, page 990, in the Nineteenth-Century Serials Edition (2008; 2018) ncse2.kdl.kcl.ac.uk/periodicals/l/issues/vm2-ncseproduct2261/page/6/