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    No. 444, SEPTRMBE^jg, 1858.] THE LEADBR,...

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    Tbe Liverpool Borough Bank. Nisi Prius C...

    was gone at that time far more than a quarter of the capital , because the paid-up capital was 940 , 000 / ., and one-fourth of that would be only 235 , 0001 . A loss therefore , of 235 , 000 / . out of the paid-up capital would have demanded their interposition for the dissolution of the companv . They had , in fact , lost very nearly 300 000 / ., besides the reserve fund . The learned counsel concluded—I shall show you , beyond all question , that the plaintiffs did actually receive these reports , and acted '¦ upon them alone ; that they are not , as perhaps may be contended on the other side , intended solely for the inspection of the proprietors , but that they have always been considered and acted upon in the open market as furnished for the guidance of the public ; and the next question is , are the misrepresentations clear , and are they such as to Impose a liability upon the defendant ? I believe when I have laid before you proofs of the facts to which I have invited your attention , —you will see , beyond all question , that the plaintiffs' —poor men , who have invested their all , probably , or nearly so , in the purchase of shares in that bank , and whose whole income , however great it may be , is liable for these debts of the bank—are entitled in justice , in law , and in good sense , to call upon Mr . Dixon to recompense them for the loss which they have sustained . Documents having been put in , Mr . John Scott , one of the plaintiffs , was examined . He and the other plaintiff , Mr . Robert Robinson , obtained the bank report of the 28 th of July from Mr . Byrne , of the firm of Brodie and Byrne , sharebrokers ; and Mr . Byrne subsequently bought the shares for them . He would have risked his life in a concern bearing the names the report did ; they understood from the report that the capital would not be interfered with , and they would get their 7 per cent , dividend . —r-Mr . Robinson wad also called . He and Mr . Scott considered the language of the report in a common-sense view , and thought they understood it , and that upon the whole their investment was a satisfactory one . —Mr . G . A . Tinley , sharebroker , proved that copies of the report were to * be obtained at th ^ bank , and that they affected the prices of the shares . . Immediately after the issue of the ¦• report in question , the pries of the shares fell from 10 / . to 9 £ , and not long afterwards to 81 . —This closed the plaintiffs' case . The Attorney-General took the opinion of the judge as to whether therewasany proof of false and fraudulent misrepresentation . —After perusing the report , his Lordship said he could not say there was no evidence . The Attorney-General then proceeded to address the jury on the merits of the case . The defendant , Mr . Dixon , was , as probably some of the jury knew , a member of the firm of Messrs .. Isaac Lowe and Co ., a gentleman who had for a long time now carried on business as a merchant' in . Liverpool j and the learned counsel thought he might with confidence and safety say of him , before the jury , that down to that moment his character for honour , integrity , and truth was without a stain , and above suspicion . He now , however , found himsel f called upon to answer , in a court of justice and before ;¦ . a jury of his country , to a charge of fraud and falsehood . Feeling himself blameless , feeling' himself quite incapable of the serious misconduct imputed to him , he had felt it his duty to come before the jury , and through him ( the learned counsel ) to state to them that the entire case should be laid before them without reserve , without disguise . They should judge in the result not whether he might or might not have been mistaken upon a point or upon points upon which any man might well err , but whether he had been guilty of fraud and falsehood—whether the charge upon the record was established , that he had fraudulently and falsely , from a fraudulent motive , deceived the plaintiff , wronged and injured him , and so been guilty of that which rendered him amenable to the law in this action . The learned counsel must join issue with his learned friend at the outset upon the law in this case . In order to maintain this action the plaintiffs must prove , to their entire satisfaction , not that the defendant had erred , that he had himself been deceived , that ho hud made , if he had made , a' also and over-sanguine estimate of the state of the banking business or of the amount of its debts or of its liabilities ; but the } ' must establish before the jury that the defendant had been guilty of a moral and criminal fraud—that lid had defraiidbU his neighbour by false- ' hood and by midropro . sentu . tion . The learned counsel complained that no witness conversant with the affairs of tho bank had been called . Perhaps every director ought to make himself acquainted with tho business of a bank . It might be generally desirable that all banking establishments should bo conducted on that princip le ) , that an intimate and accurate knowledge of all the - affairs and tho accounts of the bank should not bo oonflded either to a manager or a managing committee , but should bo clearly , simply , and accurately known to every director who sat at tho board of such an institution . But though that might bo oxtremoly desirable , Uq was B « ro they would not bo guilty of tho injustice of visiting " - " - ""^ hatHvoiild"bxra grQ ^^^ who hud boon guilty of no offonco—ono who simply ¦ went , and finding things on a tptally different principle , was unable within tho timo allotted to him to obtain that information whloh no doubt ho thought It was doeihiblo that ovory director should possess . SoinotUSng might bo said on tho other stdo , beoauno many had

    i transactions with banks , who , though they might b < i : content to allow their accounts , in which there were i transactions of delicacy , and which they desired to be I kept secret , to be known only to one or two . The ma . " nager and managing committee might not like that theii \ private and important concerns should , be known tc every director . Here there were some twelve director ! engaged in various occupations ; for though they were directors of -the bank they were also engaged in busiuess perhaps rivals in business , and there might be reasons whv the bank should not make those transactions known to all the directors . That would be found to be the case with this very bank . It was a long time before Mr , Dixon felt that there was the least hope of his establishing a better system than that which existed , which had been described in reports in 1837 and 1838 , and confirmed by the proprietors . He was a party , of course , to the annual reports made in 1855 , 1856 , arid 1857 , and down to the last and latest of these periods he had no more means of obtaining knowledge of what might be the course of thi 3 bank—he had no more means of ascertaining whether the bad debts of the bank which ought to have been written off and set aside as bad and desperate , or the extent to which any given amount of debts was bad or doubtful—he had no more means of ascertaining than any one of the jury had the means of ascertaining it before he came to the jury box on the trial of the case . It was on the very principle not only on which the bank was established , but the proprietors permitted and sanctioned its being conducted . Therefore , all he could say was that though they might think a different principle ought to prevail in the management of banks , and that no director ought to do so , and allow his name to be published to the world , giving authenticity to any statement , or holding out to the world anything upon the credit of that name , without making himself beforehanid perfectly acquainted with the strict accuracy and truth of all that was stated—although that might be their opinion , and alhough it might be a very just opinion , he might say that they would not visit even with censure , far less with punishment , a gentleman in a banking establishment conducted on this principle who was unable until too late to effect any alteration in the system , and who was ignorant himself , as a director , of all the new transactions of the bank . In May , 1857 , he proposed that the affairs of . the bank should be known to all the directors ; that was assented to , but could not be acted upon , and was not ,, until it became obvious to Mr . Dixon , then a managing director , that affairs were in a much more . unsatisfactory condition than he suspected . How the losses sustained affected the integrity of the capital Mr . Dixon was ignorant down to the time just before the report in question was made , the manager alone being acquainted with the true state of the concern . Mr . Dixon felt it a hardship that he , who alone of the twelve directors had resisted secresy , should be signalled out for what , if it succeeded , would bring ruin upon the most prosperous and wealthy of the town . After commenting upon the great difficulty of estimating with anything like accuracy the position of such a concern as this bank , the learned counsel said Mr . Dixon applied to Mr . Smith , the manager , who furnished him with a statement which contained all the information Mr . Dixon possessed prior to the publication of this report . That paper showed that 19 , 5 JO / , was to be provided for out of capital , and , adding 25 , 000 / . for a dividend of 5 per cent ., there was a deficit of 44 , 000 / . to be taken out of capital if all the anticipated losses were sustained . If any guarantee was needed of Mr . Dixon ' s good faith , it was furnished by the fact that he was the holder of 1400 shares , representing 14 , 000 / ., of which 5000 / . was invested in March , April , and May , 1857 . If he had known the state of the bank he might , if he chose , have sold out and freed himself from all responsibility ; but ho had no doubt that the bank was secure . Reckoning tho call of 5 / . a share , Mr . Dixon ' s loss would be 7000 / . in addition to the 14 , 000 / . invested . Tho question which ho should now submit for the consideration of the jury was not whether it was wise and prudent and just and right to declare this dividend—some of them might probably think , as Mr . Dixon himself thought , that they had hotter not declare tho dividend ; but the question was not whether in doing so they wore right or wrong , but whether they deceived , misled , published untruths , and fraudulently , and from fraudulent motives , published untruths to tho shareholders . How , tho Attorney-General asked , was Mr . 'Dixon to know that which Mr . lianiior only found out after sovor . il months' investiga- . tion ? Tho report itself was a very unfavourable statement indeed , and as fur as it went was strictly true . Tho learned counsel at some length contended that in agreeing to tlio dividend tho defendant ought not to bo ; ohurgod with fruud beouuso ho had not taken tho most unfavourable viow of tho affairs of tho bank , and concluded an address , the delivery of which occupied three , hours and a quarter , by saying ho should put in the fltntohVont"mn '( io Dy iVii" o'ixou inFebruary , lffBTJ ; ami * supported and verified as that would bo on oath before them , ho trusted it would convince thorn that tho defendant was an unwilling party oven to tho declaration of tho dividend ; that in all no did in relation to tho affairs of the bunk ho acted as became a man of honour and integrity , and did his duty to tho best of hia ability .

    i I He was himself a very large loser ; he had perhaps as large i a stake in it as even the respected gentleman , Mr . Rathj bone , whose name appeared as the chairman , or as any . other director in the bank ; and under all circumstances r he submitted the case to the jury confidently expecting » they would come to the conclusion that there was no ini ten tion on the part of Mr . Dixon to make a false and . ¦ fraudulent statement . , Mr . Joshua Dixon detailed the history of his conj nexion with the bank and the modejof managing-business , i At a meeting on the 4 th of July he contended that to ' . pay dividend out of capital was a logical absurdity , but . he agreed to submit to the majority , provided they - placed on record a minute , which he drew up as follows : [ —* 'A dividend of 2 § per cent , to be declared , it being understood that the statement to the shareholders at the annual meeting is to be a true and correct representation of the position of the bank as far as it goes , what- ¦'•• ever it leads up to . " A report was prepared to that effect in a different form to what was subsequently pub ^ 1 lished . In the end he waived his objections and concurred in the other report . He believed the statement as to the reserved fund was true , and also that as to 1854 , and that the good current business of the bank would enable it to give its regular dividend without encroaching on the capital . There was not ( he said ) , in my opinion , at the time , anything in the report tending to mislead persons conversant with business . I thought that with the average profits a dividend might be paid without touching the capital . I have since ascertained that the profits from June to October were in a greater ratio than that . Beyond the information furnished by Mr . Smith , 1 then had no information , and could not have had any . Mr . James did not ask the witness a question . The Attorney- General , in the course of his summing up , said it was a fallacy to say that either the defendant or any one else had . been misled , or had been induced by anv inaccuracy , if there were such—by any untruth , if there were such—in this report , to become the purchaser of these shares . If Mr . Smith ' s statement had been appended to the report issued , it would only have been statingin detail what the report stated in substance . There was therefore no misrepresentation ^ unless they could suppose , which he was sure they would not , that Mr . Dixon , by some mode of divination , could have anticipated that the bank would fail within three or four months . The real question was whether there was any pretence , for charging this gentleman with fraud in having yielded to higher authority , and in having submitted with some degree of deference to those who were older and more experienced than himself , merely so at the form in which this statement should be made , the substance of which truly represented all he had the . means of knowing at the time . Mr . James , in reply , urged that previous good character was no guarantee of the defendant ' s innocence of that charge ; admitted that all the directors were equally in fault with Mr . Dixon , but said that the evidence was more complete against him than against any others ; contended that his stake in the bank was a motive for his maintaining its credit , that his latest purchase of shares would do that by inspiring confidence , and that , in making the investment , he was like Antonio , in the " Merchant of Venice , " lending more money to Bassanio in order to recover what was already owing . Mr . Baron Martin , in summing up , said : —Gentlemen of the j ury , John Scott and Robert Robinson sue Joshua Dixon , and the ground of complaint is , that he falsely , fraudulently , and deceitfully issued a certain document in order to induce the plaintiffs to believe in the solvency of this bank , and that the plaintiffs , acting upon it , were deceived and sustained a loss , which is represented to-day by 92 / ., being the price paid for ten shares in tho bank , and 50 £ , being the amount of five colls f _ a five pound callj made on these shares since that time ; so that , if your verdict should be for the plaintiffs , it . it will bo for you to say whether tho 142 / . is the propec measure of the damage which the plaintiffs have sustained . Boforo I proceed to call your attention to the . facts of this cusc , 1 think it a matter I ought to observe ,, that if it bo possible to teach the people of this country ,, and of this town , experience at all , the result of this trial will teach them ; arid if , after this trial , they will ,, with their eyes open , deal in banks of this sort , they ought to take tho consequences on their own head ; for , it appears that this was a bank in which tho capital was said , to bo one million ; that is , capital was said to have been subscribed to tho extent of one million of money ; and by tho constitution of this bank and tho law , not merely was this million actually supplied for tho purposes , of thia bank , but tho parties who had the direction of it had the power of pledging tho credit of theao persons to tho extent of evory farthing they possessed in the world . Now , tho history of the concern is this , — that ono manager and two managing directors had tho entire control of it ; and , upon tho bank becoming insolvent last October , it wfts founci that one of tlieso ^ nanagi ' ng aIrourors ' was L in this condition—that ho himself had borrowed 10 , 0001 , from this bank , and that all ho could givo in payment of that dobt was 7000 / ., that i *» , shares representing 7000 / ., accompanied with a statement , that If that was not accepted iu uldohargo of his dobt of \ 0 > ° 0 ln ana . ™ all claim upon him by rouson of hia liability to tng

    No. 444, Septrmbe^Jg, 1858.] The Leadbr,...

    No . 444 , SEPTRMBE ^ jg , 1858 . ] THE LEADBR , ; ¦ :, _ ,,, ^__^___— 9 89

• Citation
  • Leader (1850-1860), Sept. 25, 1858, page 5, in the Nineteenth-Century Serials Edition (2008; 2018) ncse-os.kdl.kcl.ac.uk/periodicals/l/issues/cld_25091858/page/5/